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US Indicts Archegos Founder Hwang For Fraud, Market Manipulation

US Indicts Archegos Founder Hwang For Fraud, Market Manipulation
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US authorities have charged Archegos founder Bill Hwang and the firm’s chief financial officer with securities fraud and market manipulation, according to an indictment released Wednesday in a New York federal court.

Hwang and Archegos Chief Financial Officer Patrick Halligan used the firm “as an instrument of market manipulation and fraud, with far-reaching consequences for other participants in the United States securities markets,” according to the indictment.

Archegos collapsed in 2021, leading to billions of dollars in losses at Credit Suisse, Nomura, Morgan Stanley and other leading banks.

The family-owned hedge fund run by Hwang had taken huge bets on a few stocks with money borrowed from banks, and when several of those bets turned sour, the fund was unable to meet “margin calls” — when the banks demand extra cash or assets to cover losses in a brokerage account.

Hwang and other conspirators, including head trader William Tomita, sought to defraud investors by convincing them that shares in his portfolio were on the rise when the stock price increases “were the artificial product of Hwang’s manipulative trading and deceptive conduct that caused others to trade,” the indictment said.

They also repeatedly made “false and misleading statements” to convince others to trade with and extend credit to the firm.

The US financial markets regulator, the Securities and Exchange Commission (SEC), also charged Hwang, Halligan, Tomita and Chief Risk Officer Scott Becker for their roles in the scheme.

The move to inflate share prices caused the firm to expand rapidly, “increasing in value from approximately $1.5 billion with $10 billion in exposure in March 2020 to a value of more than $36 billion with $160 billion in exposure at its peak in March 2021,” the SEC said in a statement.

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AFP

Agence France-Presse (AFP) is a French state-owned international news agency based in Paris. It is the world's oldest news agency, having been founded in 1835 as Havas.




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