Bill Hwang Faces Sentencing as $46 Billion Archegos Collapse Reverberates Through Financial World
1min read Bill Hwang, the founder of Archegos Capital Management and the central figure in one of the most significant financial collapses in history, is set to receive his sentence on November 20. Prosecutors have strongly recommended a 21-year prison term, following charges of securities market manipulation and fraud. Hwang's alleged actions resulted in staggering losses of $36 billion for Archegos and over $10 billion for its creditors.
Prosecutors argue that Hwang orchestrated a wide-reaching fraud scheme via his personal hedge fund, causing seismic shifts in the stock market and inflicting severe financial damage on his trading partners. His persistence in fraudulent activities, even after being ordered to desist, coupled with a lack of remorse, led prosecutors to seek a harsh sentence to deter similarly audacious plans by other investors.
The so-called "single-day loss event" stemmed from Archegos' high-leverage bets, heavily invested in select stocks like ViacomCBS. When ViacomCBS shares drastically fell in March 2021, it prompted margin calls that Archegos couldn't meet, compelling large brokerages to execute a massive sell-off. The fund unloaded shares worth $19 billion in one day, resulting in a $33 billion market value evaporation for the associated stocks.
This catastrophic position forced Archegos into bankruptcy and sent shockwaves throughout the financial system, with major institutions like Credit Suisse, Nomura, and Morgan Stanley reporting cumulative losses of $10 billion. Credit Suisse bore the brunt of the losses, suffering a $5.5 billion hit, which precipitated its near-collapse and subsequent acquisition by UBS in 2023.
In July, a jury found Hwang guilty on 10 of the 11 charges he faced, however, his counsel contends that the prosecution has not proven the damages claimed. They argue that factors such as Hwang's age, health issues, charitable work, and low risk of recidivism should be considered to reduce his sentence. Nonetheless, prosecutors persistently advocate for a stringent punishment to serve as a powerful deterrent to potential offenders.
The unfolding of Hwang's legal journey continues to garner international attention, spotlighting the vulnerabilities in financial regulations and prompting calls for enhanced transparency to safeguard markets from similar debacles.