A New York jury has found former Wall Street trader Bill Hwang guilty of fraud and market manipulation, resulting in significant losses for major banks after the collapse of his fund Archegos. The verdict, following an eight-week trial, revealed that Hwang engaged in secretive trading strategies to artificially boost the share prices of media and technology companies, eventually leading to a sudden sell-off in March 2021. Despite being described as a devout Christian and once one of the wealthiest evangelicals in America, Hwang was found guilty on 10 out of the 11 charges he faced, with sentencing scheduled for October 28.
Hwang’s co-defendant, former Archegos chief financial officer Patrick Halligan, was also found guilty on multiple counts including racketeering and fraud. The case shed light on the opaque nature of equity swaps that Hwang used to amass significant stakes in specific companies while concealing his identity from the market. The collapse of Archegos resulted in more than $10 billion in combined losses for lenders like Credit Suisse, Nomura, Morgan Stanley, and UBS, leading to an overhaul of due diligence processes at major banks.
The trial not only exposed the intricate web of deceit woven by Hwang and his associates but also highlighted the lack of thorough analysis conducted by Wall Street banks in relation to Archegos. Messages revealed during the trial depicted a false sense of security among lenders, with celebrations turning into significant losses within a matter of weeks. The impact of Hwang’s actions reverberated through global equity markets and serves as a cautionary tale about the risks associated with speculative trading and lack of transparency in financial dealings.