Bill Hwang Sentenced to 18 Years in Prison for Archegos Fraud, Marking End to Financial Saga

New York, NY – Sung Kook “Bill” Hwang, the founder of the collapsed Archegos Capital Management, was sentenced to 18 years in prison on December 19, 2024, following his conviction on multiple federal charges. The sentencing by U.S. District Judge Alvin K. Hellerstein in Manhattan concludes a high-profile case stemming from the March 2021 implosion of his private investment firm, which resulted in over $10 billion in losses for major global banks.

Hwang, 60, was found guilty in July 2024 after a nine-week jury trial on 10 of 11 counts, including racketeering conspiracy, securities fraud, market manipulation, and wire fraud. Prosecutors asserted that Hwang and his co-conspirators orchestrated a scheme to manipulate stock prices and defraud at least nine investment banks through false and misleading statements. The judge noted the "staggering" amount of losses caused by Hwang's conduct.

The Archegos collapse stemmed from highly leveraged bets on a concentrated portfolio of stocks, primarily through total return swaps. This financial instrument allowed Archegos to build massive, undisclosed positions without directly owning the underlying shares, thus circumventing disclosure requirements. When the prices of key holdings, such as ViacomCBS and Discovery, began to fall, Archegos was unable to meet margin calls from its prime brokers.

The subsequent forced liquidation of billions of dollars in stocks by banks like Credit Suisse, Nomura, Morgan Stanley, and UBS sent shockwaves through the financial markets. Credit Suisse alone reported losses of $5.5 billion, while Nomura faced a $2.85 billion hit. Other institutions, including Morgan Stanley ($911 million) and UBS ($774 million), also incurred significant financial damage.

The legal proceedings have highlighted the risks associated with loosely regulated family offices and the opaque nature of certain derivative instruments. The case has prompted calls for increased transparency and regulatory oversight in the financial industry. Hwang's former chief financial officer, Patrick Halligan, also convicted at trial, is scheduled for sentencing in January 2025.

The sentencing of Bill Hwang marks a significant development in one of the largest white-collar crime cases in recent memory. The outcome serves as a stark reminder of the potential systemic risks posed by excessive leverage and market manipulation.