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Former Archegos Capital Management founder Bill Hwang sentenced to 18 years in prison

2024.12.05 20:20:05 Yuchan Shim
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[Coins. Photo Credit to Pxhere]

Investment manager and former billionaire investor Sung Kook “Bill” Hwang was sentenced to 18 years in prison on November 20th for orchestrating a massive fraud that cost Wall Street banks billions of dollars in losses.

The sentence, delivered by Judge Alvin K. Hellerstein at Manhattan federal court, followed Hwang’s conviction on charges of fraud and market manipulation related to the failure of his investment fund Archegos Capital Management in 2021.

Hwang, born in 1964, emigrated from South Korea to the United States in 1982, where he earned an MBA from Carnegie Mellon University.

He worked under prominent investor Julian Robertson at Tiger Management before founding his own hedge fund, Tiger Asia Management, in 2001.

Following Tiger Asia Management’s guilty plea to wire fraud in an insider-trading case in 2012, Hwang established Archegos as a family office in New York the following year.

Prosecutors proved that Hwang had lied to major investment banks about Archegos’s portfolio to borrow more money, which was used to secretly make large bets on media and technology stocks including Viacom CBS.

By leveraging billions of dollars in borrowed funds, Archegos gained control of over 50% of some stocks without triggering public disclosure requirements. 

The scheme unraveled when Archegos was unable to meet margin calls from its lenders, which prompted a mass sell-off of stocks.

The fund subsequently collapsed in less than a week, triggering a domino effect.

Stocks tied to the fund plummeted, causing massive losses for major banks, most notably Credit Suisse, which suffered losses of $5.5 billion.

While the 18 years sentence was shorter than the 21-year prison sentence sought by prosecutors, it remains uncommonly long for a financial crime.

Prosecutors are currently seeking a restitution payment, but the judge has yet to decide  on the matter.

Hwang's lawyers cited his Christian faith and donations to charity in their plea for leniency.

They also stated that his wealth, once valued at $30 billion, had fallen to around $55 million.

Hwang himself expressed remorse, stating that he felt “really terrible for what happened at Archegos.”

However, Judge Hellerstein disregarded all requests for leniency. 

He emphasized the severe impact on financial institutions, drawing parallels between Hwang and FTX founder Sam Bankman-Fried, who received a 25-year sentence for fraud in 2023.

The court determined that Hwang’s actions represented an abuse of the financial system, fundamentally undermining trust in capital markets.

Archegos’s implosion sent shockwaves through the global financial sector. 

The losses prompted calls for stricter regulatory oversight, particularly concerning the use of opaque derivative securities. 

The case has also spurred discussions about the ethical responsibilities of major financial institutions. 

Critics argue that Hwang's actions reflect deeper systemic issues within the industry, including unchecked ambition and inadequate regulations against market abuse.

The sentencing of Bill Hwang marks a moment of accountability for high-level financial misconduct. 

As Wall Street grapples with the lessons from the Archegos collapse, regulators and investors must confront the vulnerabilities in the financial system that enabled such a dramatic fraud to unfold. 

Hwang’s prison term,while substantial, serves as a reminder of the lasting impact of corporate misconduct.


Yuchan Shim / Grade 11
Cornerstone Collegiate Academy of Seoul