Archegos Capital Management founder Bill Hwang was found guilty of criminal charges stemming from his firm’s 2021 collapse, concluding a two-month trial that captivated Wall Street. The jury delivered verdicts against Hwang and his co-defendant, former Archegos chief financial officer Patrick Halligan, Wednesday in Manhattan federal court after a day of deliberations.
Both men were convicted of defrauding Archegos counterparties such as Credit Suisse Group AG and UBS Group AG by lying to them about the firm’s trading activity and the level of risk in its portfolio. Hwang was also found guilty of manipulating several stocks, including the former ViacomCBS, though he was acquitted regarding one stock. Additionally, both men were convicted of participating in a racketeering conspiracy.
Each count carries a maximum sentence of 20 years in prison. US District Judge Alvin Hellerstein set an October 28 sentencing date for both defendants. Hwang remains free on a $100 million bond secured by $5 million in cash and two properties. Halligan is free on a $1 million bond.
Hwang did not visibly react as the verdict was read, holding a plastic water bottle and staring straight ahead. Halligan clasped his hands on his lap and briefly glanced at the jury before looking down at the defense table. After the verdict, Hwang greeted his wife and other supporters warmly before exiting the courtroom. His lawyers declined to comment, and Hwang also declined to answer questions as he left the courthouse.
One juror, who requested anonymity, said he was conflicted for much of the trial due to his three-decade tenure on Wall Street. He noted that Hwang’s large-scale trading had a manipulative impact on stocks. The juror expressed some sympathy for Halligan, believing he might have been dragged into Hwang’s scheme.
Manhattan US Attorney Damian Williams stated, “This verdict should send a resounding message that this office will continue to police the financial markets with an eagle eye and swiftly hold accountable those who think they can cheat the system.” Williams’ office initiated the case against Hwang and Halligan.
Prosecutors claimed Hwang’s actions elevated the value of Archegos, his family office, to around $36 billion at its peak. However, a March 2021 downturn in Viacom shares triggered a selloff that doomed the firm, resulting in roughly $10 billion in losses for Archegos’ counterparties. The disaster significantly contributed to Credit Suisse’s 2023 collapse.
Hwang and Halligan are expected to appeal their convictions. Former federal prosecutor Edward Imperatore, who followed the case, acknowledged viable arguments regarding the definition of market manipulation, calling it a murky area of the law, but expressed doubt that the convictions would be overturned.
Archegos’ incredible rise and sudden fall stunned the financial community in early 2021. The substantial losses suffered by the banks raised serious questions about their risk assessment processes. At the time, neither Hwang nor Archegos was widely known on Wall Street, adding to the shock.
A year after Archegos’ collapse, Manhattan federal prosecutors charged Hwang and Halligan, securing cooperation from former Archegos head trader William Tomita and former risk head Scott Becker, both of whom pleaded guilty and testified against their former bosses.
Despite the high-profile nature of the case, the victims were primarily Wall Street entities rather than average investors. Hwang’s lawyers argued that the banks, as sophisticated players, knew the risks of dealing with Archegos, a family office not required to publicly disclose its holdings, but proceeded for the fees they earned.
However, Judge Hellerstein restricted the defense’s ability to blame the banks, sustaining objections when questions veered in that direction. During the trial, the defense focused on portraying Archegos’ trading as part of a long-term strategy, suggesting that stock prices moved due to reasons other than the firm’s alleged manipulation.
Tomita and Becker were key witnesses during the trial. Becker testified about deceiving banks to secure credit and trading capacity for Archegos, detailing the frantic final days of the firm as it continued lying to the banks. Defense lawyers attacked Becker for his limited direct interaction with Hwang but couldn’t challenge Tomita similarly. Tomita provided damaging testimony about Hwang micromanaging his team to manipulate stocks and directing Tomita to lie to Archegos’ counterparties about the firm’s portfolio.
Tomita testified that Hwang instructed his traders to act contrary to normal funds by generating stock prices rather than minimizing trading impact. Former UBS risk manager Bryan Fairbanks testified about being misled regarding Archegos’ portfolio, revealing that the firm was buying the same companies at multiple banks. Fairbanks stated he “probably would have hit the panic button” had he known the firm’s position concentrations, asserting, “All the information they shared with us was lies.”
Hwang’s lawyers suggested bank witnesses were biased due to career impacts from Archegos’ failure, but many objections to these questions were sustained. They also established that certain banks viewed Archegos as a revenue gap and onboarded the family office quickly to prevent losing fees to rivals.
The defense’s attempts to undermine Tomita’s credibility by questioning his post-collapse activities were limited by the judge. Instead, the defense emphasized normalizing Archegos’ trading based on widely accepted investment principles, citing Hwang’s adherence to the teachings of classic investment texts.
The case, US v. Hwang, was heard in the Southern District of New York.
