The collapse of Archegos Capital Management in spring 2021 sent shockwaves through Wall Street, leading to billions in losses for several major banks. The catastrophic event was attributed to what federal prosecutor Andrew Thomas described as “lies and manipulation” orchestrated by Bill Hwang, the founder of Archegos.
During the closing arguments of the trial, Thomas highlighted how Hwang allegedly engaged in fraudulent activities by artificially inflating stock prices to bolster the size of Archegos, ultimately defrauding banks and market participants. On the other hand, Barry Berke, Hwang’s lawyer, argued that the government was unfairly targeting his client’s high-risk trading strategies, emphasizing that Hwang’s investment decisions were based on his belief in certain companies and not manipulative intentions.
Hwang, now 60, faces a daunting legal battle with charges including securities fraud, wire fraud, conspiracy, racketeering, and market manipulation. The severity of these charges could potentially result in a life sentence if he is found guilty on all counts.
Archegos’ downfall not only caused substantial financial losses for Wall Street institutions amounting to nearly $10 billion but also led to the significant depletion of Hwang’s personal wealth. The once-obscure family office, founded by Hwang in 2013, managed a staggering $36 billion for his family and oversaw a stock portfolio exceeding $100 billion at its peak.
The firm’s investment strategies, resembling those of a hedge fund but with less regulatory oversight, involved leveraging sophisticated derivatives and borrowed capital from banks to amass large stock positions, ultimately contributing to its massive market presence and subsequent collapse.
