NEW YORK: US authorities have charged Archegos founder Bill Hwang and the firm’s chief financial officer with securities fraud and market manipulation, according to an indictment released Wednesday in a New York federal court.
Hwang and Archegos Chief Financial Officer Patrick Halligan used the firm “as an instrument of market manipulation and fraud, with far-reaching consequences for other participants in the United States securities markets,” according to the indictment.
Archegos collapsed in 2021, leading to billions of dollars in losses at Credit Suisse, Nomura, Morgan Stanley and other leading banks.
The family-owned hedge fund run by Hwang had taken huge bets on a few stocks with money borrowed from banks, and when several of those bets turned sour, the fund was unable to meet “margin calls” — when the banks demand extra cash or assets to cover losses in a brokerage account.
Hwang and other conspirators, including head trader William Tomita, sought to defraud investors by convincing them that shares in his portfolio were on the rise when the stock price increases “were the artificial product of Hwang’s manipulative trading and deceptive conduct that caused others to trade,” the indictment said.
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