Archegos Capital Management founder Sung Kook “Bill” Hwang has been convicted by a federal jury of fraud and other charges.
The charges stem from allegations of market manipulation that led to the collapse of his $36 billion private investment firm in 2021.
The jury found Hwang guilty on 10 of 11 criminal counts.
His co-defendant, Patrick Halligan, was found guilty on all three counts he faced.
Both men were in court with their lawyers as the verdict was delivered.
US District Judge Alvin Hellerstein scheduled the sentencing for October 28.
Until then, Hwang and Halligan will remain free on bail.
The Archegos collapse caused significant disruption on Wall Street and drew regulatory attention globally.
Prosecutors accused Hwang and Halligan of deceiving banks to secure billions of dollars.
They then used the money to artificially inflate stock prices of various publicly traded companies.
The trial, which began in May, highlighted the extensive damage caused by their actions.
Hwang, 60, pleaded not guilty to one count of racketeering conspiracy, three counts of fraud, and seven counts of market manipulation.
He was acquitted of a market manipulation charge related to the Chinese online video company iQIYI.
Halligan, 47, pleaded not guilty to one count of racketeering conspiracy and two counts of fraud.
He served as the chief financial officer at Archegos.
Both men face maximum sentences of 20 years in prison for each charge.
“By 2021, the defendants’ lies and manipulation had ensnared nearly a dozen stocks and half of Wall Street in a $100bn fraud, a fraud that came crashing down in a matter of days”
However, the actual sentences will likely be lower, as determined by the judge, based on various factors.
The trial focused on the downfall of Hwang’s family office, Archegos.
The collapse led to $10 billion in losses for global banks.
Shareholders also lost over $100 billion from companies in its portfolio.
Prosecutors argued that Hwang’s fraudulent actions harmed the US financial markets and ordinary investors.
They claimed it caused significant losses to banks, market participants, and Archegos employees.
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Prosecutors said Hwang secretly built large stakes in multiple companies without holding their stock.
They added he lied to banks about the size of Archegos’s derivative positions to borrow billions, which were then used to inflate stock prices.
Halligan was accused of facilitating the scheme by deceiving banks.
Assistant US Attorney Andrew Thomas said: “By 2021, the defendants’ lies and manipulation had ensnared nearly a dozen stocks and half of Wall Street in a $100bn fraud, a fraud that came crashing down in a matter of days.”
Hwang’s defense argued the case represented an aggressive criminalization of legal trading strategies.
Key prosecution witnesses, including Archegos’s head trader William Tomita and chief risk officer Scott Becker, testified against Hwang after pleading guilty to related charges.
Prosecutors noted that at its peak, Archegos had $36 billion in assets and $160 billion in exposure to equities.
The firm collapsed in March 2021.
It led to substantial bank losses, including $5.5 billion for Credit Suisse (now part of UBS) and $2.9 billion for Nomura Holdings.
