US indicts Archegos founder Hwang for fraud, market manipulation

US indicts Archegos founder Hwang for fraud, market manipulation

US indicts Archegos founder Hwang for fraud, market manipulation

US indicts Archegos founder Hwang for fraud, market manipulation

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US authorities on Wednesday filed federal costs of securities fraud and marketplace manipulation against Bill Hwang, founder of Archegos, the funding fund that imploded last 12 months and caused billions of greenbacks in losses to fundamental banks.

The own family-owned hedge fund run by means of Hwang had taken large bets on a few stocks with cash borrowed from banks, and while several of those bets turned bitter, the fund turned unable to satisfy “margin calls” to cover the losses.

The 2021 collapse of the fund sent shockwaves thru economic markets and induced $10 billion in losses for Credit Suisse, Nomura, Morgan Stanley, and other main economic institutions.

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 an indictment released in a New York federal court.

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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They also repeatedly made “false and misleading statements” to convince others to trade with and extend credit to the firm.

The fund used derivatives to take large stakes in top Chinese names such as Baidu Inc, Tencent Music Entertainment Group, and Vipshop Holding, plus US giants such as ViacomCBS and Discovery.

The plan initially worked and the fund tripled in size in just a year, while Hwang’s personal fortune soared to $35 billion from just $1.5 billion and turned him and the firm into “significant economic forces in the United States securities markets,” the filing said.

The US economic markets regulator, the Securities and Exchange Commission (SEC), additionally charged Hwang, Halligan, Tomita, and Chief Risk Officer Scott Becker for their roles inside the scheme.

The move to inflate share expenses brought about the company to make bigger unexpectedly, “growing in fee from approximately $1.5 billion with $10 billion in publicity in March 2020 to a cost of greater than $36 billion with $160 billion in publicity at its peak in March 2021,” the SEC stated in an announcement.

South Korean-born Hwang studied inside the United States and went to work for Tiger Management, rising to form his very own Tiger Asia Management. In 2012 he paid $44 million to settle with the SEC over an insider trading case.

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ing case.

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