By Jonathan Stempel
NEW YORK (Reuters) -Bill Hwang, the founder of Archegos Capital Management, could spend 21 years in prison for running a market manipulation scheme that wiped out his $36 billion business and cost his lenders more than $10 billion, federal officials said. prosecutors Friday.
In a lawsuit filed late this evening, prosecutors from the U.S. Attorney’s Office in Manhattan also asked that Hwang be ordered to forfeit $12.35 billion and pay restitution to the victims at his scheduled sentencing on Wednesday.
A 21-year term would be unusually long for a U.S. white-collar crime case, and just four years shorter than the FTX cryptocurrency exchange founder Sam Bankman-Fried received in March after being convicted of stealing billions of dollars from customers.
Prosecutors called Hwang an “unrepentant repeat offender” who appears to have found himself “innocent.”
They cited a 2012 guilty plea to wire fraud by Hwang’s former hedge fund Tiger Asia Management, and a Nov. 8 request from Hwang’s lawyers that their 60-year-old client not spend time in prison for his activities at Archegos .
“Bill Hwang used his personal hedge fund to commit a fraud that changed the U.S. stock market and caused billions of dollars in losses to his trading counterparties,” prosecutors said. “He continued that fraud even after previously being ordered not to commit securities fraud. And even now he has no remorse.”
A significant penalty, prosecutors added, would “send a signal to even the most hubristic investors that their grand schemes will be punished with serious penalties.”
Lawyers for Hwang did not immediately respond to requests for comment outside business hours.
Hwang was convicted in July of 10 criminal charges, including securities and wire fraud and racketeering conspiracy.
Prosecutors accused him of lying to banks about Archegos’ portfolio so he could borrow money aggressively and make concentrated bets on media and technology stocks like ViacomCBS through so-called total return swaps.
Hwang amassed $160 billion in equities exposure but was unable to meet margin calls as prices began to fall.
This led to the collapse of Archegos in March 2021 and caused major losses for banks such as Credit Suisse, now part of UBS, and Nomura Holdings, as several banks lost shares backing Hwang’s swaps.
Hwang did not testify during his two-month trial. It is expected that he will appeal his conviction.
In asking that he serve no prison time, Hwang’s lawyers said prosecutors did not and could not prove that Hwang’s alleged lies caused losses for the banks. They said Hwang’s age, cardiovascular disease, philanthropy and low risk of recidivism also weighed against putting him behind bars.
