Former billionaire investor Sung Kook “Bill” Hwang was sentenced to 18 years in prison on Wednesday. The collapse of Archegos Capital Managementwhich cost Wall Street’s banks are worth more than $10 billion,
Hwang was sentenced by U.S. District Judge Alvin Hellerstein in Manhattan, where a jury convicted Hwang was charged in July with 10 criminal charges including wire fraud, securities fraud and market manipulation.
Archegos’ March 2021 implosion took less than a week, shocking Wall Street and Hwang’s lenders.
The U.S. attorney’s office in Manhattan sought a 21-year prison sentence for Hwang – unusually long for a white-collar case – and called for him to forfeit $12.35 billion and compensate victims.
Prosecutor Andrew Thomas said at the sentencing hearing before Hellerstein, “This is one of a rare class of cases that can truly be described as a national disaster.”
Before sentencing Hwang, Hellerstein asked the defendant’s attorney, Dani James, what she thought of Hwang compared to Sam Bankman-Fried, who was sentenced He will be sentenced to 25 years in prison in March for stealing $8 billion from users of the now-bankrupt FTX exchange.
“Mr. Bankman-Fried was literally stealing from his clients,” James said. “I don’t think that’s what happened here.”
Hwang had asked for no jail time, forfeiture or restitution, and to remain free on bail while appealing his conviction. James said his low risk of committing more crimes meant there was no purpose for a longer prison term.
“The notion that he will commit any crimes in the future is simply not the case,” James said.
Bankman-Fried has denied wrongdoing and is appealing his conviction.
Started as a family office
Hwang, 60, was a protégé of the late hedge-fund billionaire Julian Robertson.
He founded Archegos in New York as a family office in 2013, the year his former hedge fund Tiger Asia Management pleaded guilty to wire fraud in an insider trading case.
Prosecutors accused Hwang of lying to banks about Archegos’s portfolio so he could aggressively borrow money and make bets focused on media and technology stocks such as ViacomCBS, now called Paramount Global.
While Archegos ultimately managed $36 billion, Hwang’s lending helped him acquire $160 billion worth of investments in stocks.
Their collapse came when Hwang was unable to meet margin calls, as the prices of some of his preferred stocks began to fall and various banks unloaded stocks that had backed his so-called total return swaps.
More than $100 billion of the market value of Hwang’s shares was wiped out. Several banks suffered losses, including Credit Suisse, which lost $5.5 billion, and Nomura Holdings. Credit Suisse is now part of UBS.
Hwang’s lawyers’ request for no punishment was also cited. Hwang’s Christianity and his nonprofit Grace & Mercy Foundation, which has donated at least $600 million since 2006 to combat homelessness, poverty and human trafficking, among other causes.
Hwang’s lawyers have said his net worth has fallen to “at most” $55.3 million.
Hwang’s co-defendant, former Archegos Chief Financial Officer Patrick Halligan, was convicted at the same trial on three criminal charges. His sentencing is scheduled for January 27. Both chose not to testify in their two-month trial.
