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Archegos founder Bill Hwang convicted at fraud trial over fund’s collapse

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Archegos founder Bill Hwang convicted at fraud trial over fund’s collapse

Archegos Capital Management founder Sung Kook “Bill” Hwang has been convicted of fraud and other charges by a jury in a Manhattan federal court at a criminal trial in which prosecutors accused him of market manipulation ahead of the 2021 collapse of his $36bn private investment firm.

On Wednesday, the jury, which began deliberations on Tuesday, found Hwang guilty on 10 of 11 criminal counts, and Patrick Halligan, his Archegos deputy and co-defendant, guilty on all three counts he faced. Hwang and Halligan sat flanked by their lawyers as the verdict was read by a soft-spoken foreperson.

United States District Judge Alvin Hellerstein set the sentencing for October 28. Both men will remain free on bail.

The Archegos meltdown sent shock waves across Wall Street and drew regulatory scrutiny on three continents. Prosecutors have said Hwang and Halligan lied to banks in order to obtain billions of dollars that they used to artificially pump up the stock prices of multiple publicly traded companies. The trial began in May.

Hwang, 60, had pleaded not guilty to one count of racketeering conspiracy, three counts of fraud and seven counts of market manipulation. Halligan, 47, had pleaded not guilty to one count of racketeering conspiracy and two counts of fraud. Halligan was the chief financial officer at Archegos.

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They now face maximum sentences of 20 years in prison on each charge for which they were convicted, though any sentence would likely be much lower and would be imposed by the judge based on a range of factors.

When the charges were brought in 2022, the US Department of Justice called the case an example of its commitment to hold accountable people who distort and defraud US financial markets.

Jurors heard closing arguments on Tuesday.

Implosion

The trial centred on the implosion of Hwang’s family office Archegos, which inflicted $10bn in losses at global banks and, according to prosecutors, caused more than $100bn in shareholder losses at companies in its portfolio. Prosecutors said Hwang’s actions harmed US financial markets as well as ordinary investors, causing significant losses to banks, market participants and Archegos employees.

Hwang secretly amassed outsized stakes in multiple companies without actually holding their stock, according to prosecutors. Hwang lied to banks about the size of the derivative positions of Archegos in order to borrow billions of dollars that he and his deputies then used to artificially inflate the underlying stocks, prosecutors said.

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Halligan was accused by prosecutors of lying to banks and enabling the criminal scheme.

During closing arguments, Assistant US Attorney Andrew Thomas told jurors, “By 2021, the defendants’ lies and manipulation had ensnared nearly a dozen stocks and half of Wall Street in a $100bn fraud, a fraud that came crashing down in a matter of days.”

Hwang’s defence team painted the indictment as the “most aggressive open market manipulation case” ever brought by US prosecutors. Hwang’s attorney, Barry Berke, told jurors in his closing argument that prosecutors criminalised aggressive but legal trading methods.

Archegos’s head trader, William Tomita, and chief risk officer, Scott Becker, testified as prosecution witnesses after pleading guilty to related charges and agreeing to cooperate in the case.

According to the US Attorney’s Office for the Southern District of New York, which brought the case, Hwang’s positions eclipsed those of the companies’ largest investors, driving up stock prices. At its peak, prosecutors said Archegos had $36bn in assets and $160bn of exposure to equities.

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When stock prices fell in March 2021, the banks demanded additional deposits, which Archegos could not make. The banks then sold the stocks backing Hwang’s swaps, wiping out an alleged $100bn in value for shareholders and billions at the banks, including $5.5bn for Credit Suisse, now part of UBS, and $2.9bn for Nomura Holdings.

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Armed men fire on Haiti hospital reopening, killing at least 2

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Armed men fire on Haiti hospital reopening, killing at least 2
At least two people were killed and others injured on Tuesday when armed men opened fire on a group of journalists who gathered for a government press conference set to announce the reopening of Haiti’s largest public hospital, a witness to the attack told Reuters.
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US citizen imprisoned in Russia given new 15-year sentence in wake of espionage conviction

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US citizen imprisoned in Russia given new 15-year sentence in wake of espionage conviction

A Russian-born U.S. citizen who was already behind bars in Russia on a bribery conviction has been handed a second sentence for espionage.

Eugene Spector was sentenced to a new 15-year term for his espionage conviction, according to Russian news agencies. Spector was born and raised in Leningrad, Russia, but later moved to the U.S. and became a citizen.

A Moscow court brought espionage charges against Spector in August of last year, although details surrounding the case were not made publicly available.

RUSSIA ARRESTS US CITIZEN ON ESPIONAGE CHARGES: REPORT

Eugene Spector, a Russian-born U.S. citizen already imprisoned in Russia on a bribery conviction, has been handed a second 15-year jail term for espionage. (AP)

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The U.S. State Department said it was aware of reports of a U.S. citizen in Russia being sentenced and that it was monitoring the situation.

Spector, a former executive at a medical equipment company in Russia, was sentenced in September 2022 to three and a half years in prison for enabling bribes to an aide of former Russian Deputy Prime Minister Arkady Dvorkovich.

WALL STREET JOURNAL’S EVAN GERSHKOVICH REVEALS SHADOWY KREMLIN FIGURE BEHIND IMPRISONMENT IN RUSSIA

Jail

A Moscow court brought espionage charges against Spector in August of last year. (iStock)

The aide, Anastasia Alekseyeva, was sentenced to 12 years in April for accepting bribes of two expensive overseas vacation trips.

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Dvorkovich was a deputy prime minister under former Russian Prime Minister Dmitry Medvedev in 2012 to 2018. Dvorkovich is currently head of the international chess federation FIDE.

The Associated Press contributed to this report.

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Passenger plane crashes in Kazakhstan: Emergencies ministry

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Passenger plane crashes in Kazakhstan: Emergencies ministry

BREAKING,

Passenger plane crashed near the city of Aktau.

An passenger plane flying from Azerbaijan to Russia crashed near the city of Aktau in Kazakhstan, the Central Asian country’s Emergencies Ministry said in a statement.

Fourteen people had survived the crash and had been hospitalised, according to the local health officials.

“At the moment, 14 survivors have been taken to the regional hospital, including five in intensive care,” the health ministry’s regional department said in a statement. The Emergencies Ministry said fire services had put out the blaze

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Azerbaijan Airlines said the Embraer 190 aircraft, with flight number J2-8243, had been flying from Baku to Grozny, the capital of Russia’s Chechnya, but had been forced to make an emergency landing approximately 3 km (1.8 miles) from the Kazakh city of Aktau.

Russian news agencies said the plane had been rerouted due to fog in Grozny.

Authorities in Kazakhstan said they had begun looking into different possible versions of what had happened, including a technical problem, Russia’s Interfax news agency reported.

More to follow.

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