Bill Hwang, the founder of the family firm that collapsed Archegos Capital Management, was arrested by U.S. authorities, who accused the fund’s senior executives of manipulating securities prices in their portfolios.
The indictment, which was dropped on Wednesday, accuses Wang and former CFO Patrick Alligan of using Archegos as “an instrument of manipulation and market fraud” that had “far-reaching implications for other participants in the US securities markets”.
The case, brought by federal prosecutors in Manhattan, marks the first criminal charges against Wang, one of the veteran Tiger Cobb of the Julian Robertson Tiger Foundation, whose unknown fund rocked some of Wall Street’s largest financial institutions when it broke out a year ago.
While Archigo Was a relatively unknown family firm, it managed to attract many of the largest lenders. Archegos’ capital swelled from $ 1.5 billion in March 2020 to $ 35 billion a year later, when the group’s positions rose to $ 160 billion.
When it collapsed, it created Billions of dollars Of losses to investment banks, including Credit Suisse, UBS, Nomura and Morgan Stanley, after it failed to make margin readings.
The group, using money borrowed from banks like Morgan Stanley and Credit Suisse, has amassed billions of dollars in US-traded companies like ViacomCBS – now known as Paramount – and online retailers Shopify and Farfetch. But by using derivatives, Sold shares on behalf of Archegos, the company did not leave a visible footprint of its activities to the investing public.
Wang’s lawyer said on Wednesday that the investor was “completely innocent of any wrongdoing” and that the allegations were “excessive”.
“We are very disappointed that the U.S. Attorney’s Office has found it appropriate to file an indictment in a case that has no factual or legal basis; This type of lawsuit, for open market transactions, is unprecedented and threatens all investors, “said Lawrence Lustberg, Wang’s attorney.
The Securities and Exchange Commission, which charged Archegos and Wang with a civil fraud charge alongside the criminal charges on Wednesday morning, said that in March 2021 Archegos’ derivatives and shares in ViacomCBS accounted for more than half of the company’s tradable shares.
The SEC said that in June 2020, when asked by a colleague whether the rise in ViacomCBS shares “was a ‘sign of strength'”, Huang sent a message: “No. It’s a sign I’m buying. He added the emoji to tears of joy or laughter, the SEC noted.
Prosecutors allege that Wang and Alligan, along with several other senior officials, used two related criminal plots. They argued that Archagos disguised its trading and positions so that its counterparties and other traders in the market believed that “these stock prices are a product of natural forces of supply and demand, when, in truth, they were an artificial product of Wang’s manipulative trading.”
The fall of Archagos has Caused new legislation From the regulators in the SEC, who are pushing to renew the disclosures to large investors.
Archegos founder Bill Hwang arrested on US fraud charges Source link Archegos founder Bill Hwang arrested on US fraud charges