Archegos' Bill Hwang lied to become Wall Street legend, causing $36B fund to collapse: prosecutors

Published

12 months ago

May 14, 2024

admin

Sung Kook “Bill” Hwang tried to trick all of Wall Street, a federal prosecutor told a Manhattan federal jury, as the trial on charges stemming from the 2021 collapse of Hwang’s $36 billion fund Archegos Capital Management began on Monday.

Prosecutors have alleged that Hwang andArchegoslied to Wall Street banks to secure billions of dollars of funding that they then used to inflate stock prices.

FormerArchegosChief Financial Officer Patrick Halligan, who is also on trial, enabled the scheme, they claim.

Archegos’ collapse caused more than $100 billion in shareholder losses at companies in its portfolio, harming investors who sold shares after their scheme collapsed, prosecutors also allege.

Hwang and Halligan have pleaded not guilty.

Assistant US Attorney Alexandra Rothman told the jury of 12 people that Hwang sought to become a Wall Street legend by pumping the value of his holdings through manipulative trading, turning Archegos into a criminal enterprise.

“Bill Hwang was a billionaire and yet he risked nearly everything because he wanted more: more money, more success, more power,” she said.

“To those in the know he was a great investor. He had it all. But it wasn’t enough,” Rothman added.

The case has been closely watched on Wall Street as a test of prosecutors’ ambitious market manipulation theory.

It is expected to shed light on the inner workings of banks’ dealings with profitable but risky clients.

Hwang’s attorney Barry Berke told jurors that his client staked his own cash on companies he believed in deeply, trading like he was prepared to lose it all.

“The reason he did it was because he had the courage of his convictions,” Berke said.

Halligan’s attorney Mary Mulligan said her client was not a risk taker, but a bean counter who saw the firm’s financial position as solid.

The banks Archegos traded with knew the risks and kept trading with the firm anyway to chase profits, Mulligan said.

Testimony in the trial, which could last up to eight weeks, will center on the implosion of Hwang’s lightly regulated family investment office Archegos, which prosecutors allege caused more than $100 billion in shareholder losses at companies in its portfolio.

The case is one of several brought by US Attorney Damian Williams alleging wrongdoing by powerful investors amid the wild market swings that occurred during the COVID-19 pandemic.

Prosecutors accuse Hwang of using financial contracts known as total return swaps to secretly amass outsize stakes in multiple companies without actually holding their stock.

His positions were so large they eclipsed that of the companies’ largest investors, driving up stock prices, prosecutors say. At its peak, they say, Archegos had $36 billion in assets and $160 billion of exposure to equities.

Falling stock prices in March 2021 triggered margin calls that Archegos was unable to meet. That, in turn, led some banks to dump the stocks backing his swaps, causing billions in combined losses for Archegos and banks including Morgan Stanley, Credit Suisse, now part of UBS, and Nomura Holdings.

Hwang and Halligan are charged with racketeering conspiracy. Hwang faces an additional 10 counts of fraud and market manipulation, and Halligan an additional two counts of fraud. Each count carries a maximum potential sentence of 20 years.

Hwang’s lawyers have described the case as the “most aggressive open market manipulation case ever” brought by prosecutors. Several attorneys told Reuters it may be a tough case for the government.

Archegos head trader William Tomita and Chief Risk Officer Scott Becker have pleaded guilty to related charges and are expected to testify at the trial. Some bank executives may also appear on the witness stand.

UK

Eight arrests in connection with two separate terrorism investigations

Published

4 mins ago

May 4, 2025

admin

Eight arrests in connection with two separate terrorism investigations

Eight men have been arrested by the Metropolitan Police in two unconnected terrorism investigations.

In one operation on Saturday, counter-terror officers arrested five men, four of whom are Iranian nationals. All are in police custody.

The Met said the arrests related to a “suspected plot to target a specific premises”.

In an update shortly after midnight, the force said: “Officers have been in contact with the affected site to make them aware and provide relevant advice and support, but for operational reasons, we are not able to provide further information at this time.”

It added officers were carrying out searches at a number of addresses in the Greater Manchester, London and Swindon areas in connection with the investigation.

It said those detained were:

• A 29-year-old man arrested in the Swindon area
• A 46-year-old man arrested in west London
• A 29-year-old man arrested in the Stockport area
• A 40-year-old man arrested in the Rochdale area
• A man whose age was not confirmed arrested in the Manchester area.

Commander Dominic Murphy, head of the Met’s Counter Terrorism Command, said: “This is a fast-moving investigation and we are working closely with those at the affected site to keep them updated.

“The investigation is still in its early stages and we are exploring various lines of enquiry to establish any potential motivation as well as to identify whether there may be any further risk to the public linked to this matter.

“We understand the public may be concerned and as always, I would ask them to remain vigilant and if they see or hear anything that concerns them, then to contact us.

“We are working closely with local officers in the areas where we have made arrests today and I’d like to thank police colleagues around the country for their ongoing support.”

Terror arrests in separate investigation

Police also arrested three further Iranian nationals in London on Saturday as part of another, unrelated counter terror investigation.

The suspects were detained under section 27 of the National Security Act 2023, which allows police to arrest those suspected of being “involved in foreign power threat activity”.

Home secretary Yvette Cooper said in a statement: “I want to thank the police and our security services for the action they have taken to keep our country safe.

“Protecting national security is the first duty of government and our police and security services have our strong support in their vital work.”

She added: “These are serious events that demonstrate the ongoing requirement to adapt our response to national security threats.”

Politics

Pro-crypto Democrats pull support for stablecoin bill in last minute

Published

50 mins ago

May 4, 2025

admin

Pro-crypto Democrats pull support for stablecoin bill in last minute

A group of US Senate Democrats known for supporting the crypto industry have said they would oppose a Republican-led stablecoin bill if it moves forward in its current form.

The move threatens to stall legislation that could establish the first US regulatory framework for stablecoins, according to a May 3 report from Politico.

Per the report, nine Senate Democrats said in a joint statement that the bill “still has numerous issues that must be addressed.” They warned they would not support a procedural vote to advance the legislation unless changes are made.

Among the signatories were Senators Ruben Gallego, Mark Warner, Lisa Blunt Rochester and Andy Kim — all of whom had previously backed the bill when it passed through the Senate Banking Committee in March.

The bill, introduced by Senator Bill Hagerty, is formally known as the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.

Senate prepares to vote on stablecoin bill

The Senate is expected to begin floor consideration of the bill in the coming days, with the first vote potentially taking place next week.

The bill has been championed by the crypto industry as a landmark step toward regulatory clarity. However, the Democrats’ about-face reflects growing unease within the party.

Although revisions were made to the bill after its committee approval to address Democratic concerns, the lawmakers said the changes fell short. They called for stronger safeguards related to Anti-Money Laundering, national security, foreign issuers, and accountability measures for noncompliant actors.

The statement was also signed by Senators Raphael Warnock, Catherine Cortez Masto, Ben Ray Luján, John Hickenlooper and Adam Schiff.

Senator Kirsten Gillibrand and Senator Angela Alsobrooks were absent from the list, who co-sponsored the bill alongside Hagerty.

Despite their objections, the Democratic senators emphasized their commitment to shaping responsible crypto regulation. They reportedly said they “are eager to continue working with our colleagues to address these issues.”

Crypto needs a stablecoin bill

On April 27, Caitlin Long, founder and CEO of Custodia Bank, criticized the US Federal Reserve for quietly maintaining a key anti-crypto policy that favors big-bank-issued stablecoins, despite relaxing crypto partnership rules for banks.

Long explained that while the Fed recently rescinded four prior crypto guidelines, a Jan. 27, 2023, statement was left intact in coordination with the Biden administration.

The guidance, according to Long, blocks banks from engaging directly with crypto assets and prohibits them from issuing stablecoins on permissionless blockchains.

However, Long noted that once a federal stablecoin bill becomes law, it could override the Fed’s stance. “Congress should hurry up,” she urged.

Magazine: Financial nihilism in crypto is over — It’s time to dream big again

UK

Pictured: Boy killed in Gateshead industrial estate fire – 14 children arrested on suspicion of manslaughter

Published

1 hour ago

May 4, 2025

admin

Pictured: Boy killed in Gateshead industrial estate fire - 14 children arrested on suspicion of manslaughter

Tributes have been paid to 14-year-old Layton Carr who died in a fire at an industrial estate.

Eleven boys and three girls, aged between 11 and 14 years, have been arrested on suspicion of manslaughter after the incident in Gateshead on Friday. They remain in police custody.

Firefighters raced to Fairfield industrial park in the Bill Quay area shortly after 8pm, putting out the blaze a short time later.

Police then issued an appeal for a missing boy, Layton Carr, who was believed to be in the area at the time.

In a statement, the force said that “sadly, following searches, a body believed to be that of 14-year-old Layton Carr was located deceased inside the building”.

Layton’s next of kin have been informed and are being supported by specialist officers, police added.

A fundraising page on GoFundMe has been set up to help Layton’s mother pay for funeral costs.

Organiser Stephanie Simpson said: “The last thing Georgia needs to stress trying to pay for a funeral for her Boy Any donations will help thank you.”

One tribute in a Facebook post read: “Can’t believe I’m writing this my nephew RIP Layton 💔 forever 14 you’ll be a massive miss, thinking of my sister and 2 beautiful nieces right now.”

Another added: “My boy ❤️ my baby cousin, my Layton. Nothing will ever come close to the pain I feel right now. Forever 14. I’ll miss you sausage.”

A third said: “Rest in peace big lad such a beautiful soul taken far to soon my thoughts are with you Gee stay strong girl hear for u always.”

Detective Chief Inspector Louise Jenkins, of Northumbria Police, also said: “This is an extremely tragic incident where a boy has sadly lost his life.”

She added that the force’s “thoughts are with Layton’s family as they begin to attempt to process the loss of their loved one”.

They are working to establish “the full circumstances surrounding the incident” and officers will be in the area to “offer reassurance to the public”, she added.

A cordon remains in place at the site while police carry out enquiries.