The founder of Archegos Capital Management, a hedge fund, was sentenced to 18 years in prison on Wednesday for securities and market manipulation fraud in a scheme that prosecutors said cost global investment banks billions of dollars.
Bill Hwang was informed of the duration of the prison sentence in Manhattan federal court after expressing remorse for the events at Archegos three years ago.
The sentencing hearing was adjourned by the judge and will resume on Thursday. However, he indicated that he had already determined the length of the prison term he is imposing.
Hellerstein estimated that more than nine financial institutions lost over $9 billion due to the fraud.
During Hwang’s trial in July, prosecutors accused Hwang and his associates of artificially inflating the values of nearly a dozen stocks, causing investments to collapse in March 2021, resulting in a $100 billion market value loss and the collapse of his company.
Hwang was found guilty of 10 criminal charges in July, including market manipulation, while being acquitted of one charge.
Prosecutors claimed that Hwang deceived banks in order to receive billions of dollars to expand his New York-based investment firm, leading to a significant increase in its portfolio value.
At the beginning of Hwang’s trial, Assistant U.S. Attorney Alexandra Rothman stated that Hwang sought to become a legend on Wall Street by executing a sophisticated scheme involving derivative stock trades to amass large positions in a few companies secretly.
According to the indictment, the investing public was unaware that Archegos had significant influence over the trading and ownership of multiple companies due to using non-disclosed securities. For example, Hwang and his company allegedly controlled over 50% of ViacomCBS shares without public knowledge.
However, these risky maneuvers made the firm vulnerable to fluctuations in stock prices.
Margin calls in late March 2021 resulted in a market value loss of over $100 billion within days, according to the indictment.
