In connection with the collapse of Archegos Capital Management, which cost Wall Street banks over $10 billion, former billionaire investor Sung Kook Bill Hwang was sentenced to 18 years in prison on Wednesday.
U.S. District Judge Alvin Hellerstein sentenced Hwang in Manhattan after a jury found him guilty in July of ten federal offenses, including market manipulation, securities fraud, and wire fraud.
Before announcing the punishment, Hellerstein stated, “The amount of losses that were caused by your conduct are larger than any other losses I have dealt with.”
Wall Street and Hwang’s lenders were shocked by Archego’s March 2021 catastrophe, which happened in less than a week.
The Manhattan U.S. Attorney’s office requested that Hwang forfeit $12.35 billion and compensate the victims in addition to receiving an exceptionally lengthy 21-year jail sentence for a white-collar case.
At the sentence hearing before Hellerstein, prosecutor Andrew Thomas stated that it is one of the few situations that can be genuinely characterized as a national tragedy.
On Wednesday, Hellerstein was unable to decide whether Hwang needed to pay restitution or forfeit funds. On Thursday, the sentencing hearing is anticipated to resume.
Prior to Hwang’s sentencing, Hellerstein questioned Dani James, the defendant’s attorney, how she felt Hwang compared to Sam Bankman-Fried, who was given a 25-year prison sentence in March for stealing $8 billion from customers of the now-defunct FTX exchange.
James said that Mr. Bankman-Fried was actually robbing his clients. That’s not what happened here, in my opinion.
Hwang had requested to be released on bond while he challenged his sentence, without being imprisoned or subject to forfeiture or compensation. James said that a long prison sentence was pointless because he had little chance of committing new crimes.
According to James, the idea that he might commit a crime in the future is simply untrue.
Bankman-Fried is contesting his conviction and denies any misconduct.
STARTED AS FAMILY OFFICE
Hwang, 60, was a protégé of the late Julian Robertson, a millionaire hedge fund manager.
In 2013, the year after his previous hedge firm Tiger Asia Management entered a guilty plea to wire fraud in an insider-trading case, he established Archegos in New York as a family office.
Hwang was charged by the prosecution with deceiving banks about Archego’s holdings in order to obtain a large loan and place concentrated wagers on technology and media firms, including ViacomCBS, which is now known as Paramount Global.
Hwang’s borrowing enabled him to accumulate $160 billion in stock exposure, but Archegos ultimately managed $36 billion.
When the prices of some of Hwang’s favorite equities started to decline and different banks unloaded stocks that had backed his so-called total return swaps, he was unable to pay margin calls, which ultimately led to his demise.
Hwang’s stocks lost more than $100 billion in market value. A number of banks experienced losses, including Nomura Holdings and Credit Suisse, which lost $5.5 billion. Credit Suisse has joined UBS.
In support of their request for no penalty, Hwang’s attorneys also pointed to his Christian beliefs and his nonprofit organization, the Grace and Mercy Foundation, which has contributed at least $600 million since 2006 to fight poverty, human trafficking, and homelessness, among other issues.
Prior Judge Hellerstein announcing the sentence, Hwang told the court that he hoped the punishment would let him serve as long as possible under the circumstances.
According to Hwang’s attorneys, his net worth has decreased to a maximum of $55.3 million.
At the same trial, Hwang’s co-defendant, Patrick Halligan, the former chief financial officer of Archegos, was found guilty of three crimes. His sentencing date is set for January 27. During their two-month trial, neither decided to testify.
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