Korean-American billionaire Bill Hwang (Sung Kook Hwang in Korean) has been sentenced to 18 years in prison on Wednesday for market manipulation and fraud related to his firm, Archegos Investment Management Company. The collapse of Archegos in 2021 resulted in more than $10 billion in losses for creditors, leading to what some media outlets have dubbed as the “largest single-day losses” and the “century’s greatest margin call.”
In July of this year, a jury found Hwang guilty of 10 criminal charges, including wire fraud, securities fraud, and market manipulation. Despite the 18-year sentence being severe for white-collar crimes, it fell short of the prosecution’s request for a 21-year sentence, with Hwang’s defense attorneys having sought to avoid imprisonment.
Assistant Prosecutor Andrew Thomas described the case as “one of the few that can truly be described as a national disaster.” The prosecution has asked for the seizure of $12.35 billion from Hwang and compensation for the victims, but the court has yet to make a decision on this matter, with related hearings set to resume on Thursday.
The 60-year-old Hwang was accused of concealing Archegos’ investment holdings to secure billions in loans, enabling him to make highly leveraged bets on media and technology stocks such as ViacomCBS and Discovery. The plan unraveled in a matter of days in March 2021, resulting in Swiss bank Credit Suisse losing over $5 billion and Japan’s Nomura Holdings facing losses exceeding $3 billion, leading to shareholder losses of approximately $100 billion.
Hwang, a disciple of the late hedge fund giant Julian Robertson, transformed his hedge fund, Tiger Asia, into a family office in 2013 after settling legal disputes related to insider trading allegations. He then established Archegos Capital Management Company. Previously, he had been charged with wire fraud for illegal trading in Chinese stocks and paid a $44 million fine to settle the charges.
Prosecutors noted that Hwang hid investment risks from banks, accumulating a stock exposure of $16 billion. As stock prices began to fall, he was unable to meet margin calls, resulting in Archegos’ $36 billion collapsing instantly, causing significant losses in the financial markets.
Hwang’s lawyers argued against punishment and highlighted that since 2006, Hwang’s foundation had donated at least $600 million to combat issues such as homelessness and poverty. In court, Hwang expressed a desire for the imposed penalty to allow him to “serve society as much as possible in the present situation.”
During the hearing, Federal Judge Alvin Hellerstein of the Southern District of New York questioned Hwang’s lawyer about the comparison between his case and that of Sam Bankman-Fried, the founder of FTX, who was sentenced to 25 years in prison in March for embezzling $8 billion.
Hwang’s lawyer contended that Hwang did not directly steal client funds, stating, “Mr. Bankman-Fried was actually stealing from his clients, and I don’t think that’s what happened here.” She mentioned that Hwang’s net assets had dwindled to a maximum of $55.3 million.
The judge pointed out that the losses caused by Hwang exceeded any case he had dealt with before.
Hwang’s co-defendant, Patrick Halligan, the former CFO of Archegos, was found guilty of all three criminal charges as a conspirator. His sentencing is scheduled for January 27 next year.