Bill Hwang was found guilty of fraud and market manipulation in early July, following his trial. He theoretically faced a sentence of 200 years in prison.
The former boss of the American investment fund Archegos Capital Management, whose implosion shook the financial markets in 2021, was sentenced on Wednesday to 18 years in prison by a federal judge in Manhattan, according to several American media.
Bill Hwang was found guilty of fraud and market manipulation in early July, following his trial.
He theoretically faced a sentence of 200 years in prison.
The former financial director of Archegos, Patrick Halligan, was also found guilty, but of only three counts compared to ten for Bill Hwang.
In the midst of the Covid-19 pandemic, Bill Hwang had accumulated massive market positions in a few months – and essentially hidden – in a few companies.
At its peak, in March 2021, Archegos was exposed to the tune of $160 billion through derivative products, thanks to which Bill Hwang’s company had multiplied its strike force, but also the risks incurred.
These were “swaps”, contracts which allow an investor to benefit from the fluctuations of a stock without holding it himself.
Its objective was to increase the price of the few companies in which Archegos had invested.
In particular, he managed to almost quadruple the valuation of ViacomCBS (which has since become Paramount Global) in just over four months.
At the same time, this American financier of South Korean origin and three of his executives had hidden the size of their positions from the establishments which sold them these “swaps” or lent him money.
The fragile edifice collapsed when ViacomCBS announced, in March 2021, a capital increase, which triggered a brutal movement of sales of securities on Wall Street.
This inflection caused a domino effect, which caused Archegos’ cash flow to melt at an accelerated rate and plunge the price of the securities held by the investment fund.
Around $100 billion in market capitalization was lost, harming other shareholders of these companies and the establishments that had done business with Archegos, mainly banks.
The hardest hit was Credit Suisse, which lost some $5.5 billion. In total, the slate amounts to around 10 billion for the banks caught in this whirlwind.
This event further weakened Credit Suisse, which came close to bankruptcy in March 2023 before being taken over by its Swiss competitor UBS.
