LDN - Business

The rise and fall of Bill Hwang's Archegos Capital Management

[May 09, 2024] By Nupur Anand

NEW YORK (Reuters) - Sung Kook “Bill” Hwang, founder of the $36 billion private investment firm Archegos Capital Management which collapsed spectacularly in 2021, arrived in court on Wednesday for the start of his criminal trial.

Here is a timeline of the fund's blow up - one of the biggest in years - which left global banks with $10 billion in losses:

1996-2001: Hwang, who moved to the United States as a child from South Korea, works at the late billionaire Julian Robertson’s pioneering hedge fund Tiger Management, where he hones his stock-picking skills.

2001: Hwang launches his own hedge fund, Tiger Asia Management. The firm was started with seed money from Robertson, making him part of an elite group of the billionaire's protégés dubbed the Tiger Cubs.

2012: Regulatory issues in Hong Kong and the United States lead Tiger Asia Management to shut down in 2012. Hwang pleads guilty to wire fraud relating to illegal trading of Chinese bank stocks and separately pays $44 million to U.S. authorities to settle insider trading charges.

2013: Hwang turns Tiger Asia into a family office, renaming it Archegos Capital Management in early 2013.

March 2020: Operating from his Manhattan apartment as COVID-19 sweeps New York, Hwang begins amassing huge positions in a handful of securities, including media company ViacomCBS, using derivatives he trades with Wall Street banks. The trades allow Hwang to accumulate leveraged positions in the stocks without owning them and without having to disclose his stakes.

March 2021: ViacomCBS announces a stock sale which sends its share price tanking, setting off alarm bells at Archegos' banks. Banks call on the fund for more collateral to cover the increased exposure on the swaps. But Archegos does not have enough liquidity to meet the calls.

That leads to some banks dumping the stocks that back his swaps, causing big losses for Archegos and its lenders, such as Credit Suisse, now part of UBS, and Nomura Holdings.

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Damian Williams, U.S. Attorney for the Southern District of New York, announces the indictment charging Sung Kook (Bill) Hwang, the founder and head of a private investment firm known as Archegos, and Patrick Halligan, Archegos's Chief Financial Officer, with racketeering conspiracy, securities fraud, and wire fraud offenses, while the U.S. Deputy Attorney General Lisa Monaco looks on at the U.S. Attorney's Office for the Southern District of New York, in New York City, U.S., April 27, 2022. REUTERS/Shannon Stapleton/File Photo

As banks begin to report losses, regulators including the SEC start probing the collapse of the fund.

April 2022: Federal prosecutors charge Hwang with 11 criminal counts and Archegos' former chief financial officer, Patrick Halligan, with three criminal counts.

Authorities allege Hwang and Halligan lied to banks in order to increase Archegos' credit lines and use the borrowed money to manipulate stock prices.

Hwang faces charges of racketeering, securities fraud, securities fraud of counterparties and wire fraud along with seven counts of market manipulation. Halligan is charged with racketeering, wire fraud and securities fraud of counterparties.

Both plead not guilty to charges and are released on bail.

Hwang's attorneys' did not immediately respond to a request seeking comment.

May 2024: Hwang and Halligan's trial kicks off. They are expected to argue that prosecutors are overreaching by pushing a novel market manipulation theory.

Hwang and Archegos have argued that the SEC has failed to show how the New York-based firm traded deceptively or how its swaps trades, which they say are lawful, affected prices.

(Reporting by Nupur Anand in New York; Editing by Michael Erman)

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