Federal Authorities Arrest Archegos Owner for Alleged Fraud

Archegos Capital Management’s owner, Bill Hwang, and its former chief financial officer, Patrick Halligan, were arrested by federal agents after they were charged with crimes including racketeering conspiracy and securities fraud.

Manhattan U.S. Attorney Damian Williams explained that Hwang and Halligan, 45, have been charged with 11 criminal counts, including racketeering conspiracy, market manipulation, wire fraud, and securities fraud. 

According to federal prosecutors, Hwang used Archegos for ” market manipulation and fraud,” to inflate its portfolio from $1.5 billion to $35 billion before last year’s implosion. 

Hwang reportedly utilized derivative securities that had no public disclosure requirements which prevented investors from knowing that Archegos was dominating the trading of a few select companies.

Archegos’ implosion caused millions of losses for its clients such as banks and major companies like ViacomCBS, Discovery Communications, Chinese education technology company GSX Techedu, Credit Suisse Group AG, Nomura Holdings Inc., and Morgan Stanley.

“We are extremely disappointed that the U.S. Attorney’s Office has seen fit to indict a case that has absolutely no factual or legal basis; a prosecution of this type, for open-market transactions, is unprecedented and threatens all investors,” said Lawrence Lustberg, Hwang’s legal representative. 

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