Three years ago, a multibillion-dollar investment firm called Archegos Capital Management blew up with little warning, causing big losses for some Wall Street banks and leading to federal criminal charges against the firm’s founder, Bill Hwang.
On Wednesday, Mr. Hwang, 60, who was charged with 11 counts of securities fraud, wire fraud, conspiracy, racketeering and market manipulation, is set to go on trial in Manhattan federal court. If convicted, he could spend the rest of his life in prison.
Federal prosecutors are seeking to secure a conviction in a major stock market manipulation case in which Mr. Hwang, whose legal name is Sung Kook Hwang, was one of the big financial losers. Archegos had managed money mainly for Mr. Hwang, his family and some of his employees, and much of his family’s wealth was wiped out when the firm collapsed in March 2021. Also on trial with Mr. Hwang is Patrick Halligan, the former chief financial officer of Archegos.
Authorities have said Archegos inflated the prices of stocks it invested in by using tens of billions of borrowed dollars from Wall Street banks to keep buying more and more shares. The surging share prices encouraged other investors to buy, pushing the prices even higher. At its peak, the strategy increased Mr. Hwang’s net worth to more than $35 billion, and the overall value of the stocks that Archegos owned was more than $100 billion.
Damian Williams, the U.S. attorney for the Southern District of New York in Manhattan, called Archegos’s scheme to pump up the price of stocks “historic in scope” when his office announced the filing of charges against Mr. Hwang and Mr. Halligan in April 2022.
Barry Berke, a lawyer for Mr. Hwang, declined to comment. But at a court hearing a few months ago, Mr. Berke said his client “never sold a nickel of his shares.”
