Following the collapse of Archegos Capital Management in 2021, which resulted in losses of over $100 billion for various companies and billions of dollars for banks, Sung Kook “Bill” Hwang, the founder of the $36 billion private investment firm, appeared in court for the start of his criminal trial on Wednesday. The timeline below provides a detailed account of the events leading up to this point:
1. 1996-2001: Hwang worked for Julian Robertson’s Tiger Management, honing his stock-picking abilities during this time.
2. 2001: Hwang established his own hedge fund, Tiger Asia Management, with seed capital from Robertson.
3. 2012: Due to regulatory issues in China and the US, Tiger Asia Management closed its doors. Hwang pleaded guilty to wire fraud related to illicit trading of Chinese bank shares and paid $44 million in fines to US authorities for insider trading charges.
4. 2013: After being shuttered, Tiger Asia became a family office called Archegos Capital Management, which Hwang renamed in early 2013.
5. March 2020: As the COVID-19 pandemic swept through New York City, Hwang began building significant holdings in a few specific securities, notably media corporation ViacomCBS, utilizing derivatives provided by financial institutions. This strategy allowed him to acquire heavily leveraged positions in these stocks without the need to reveal his holdings publicly.
6. March 2021: ViacomCBS announced a stock offering, causing the stock’s price to fall significantly. This triggered alarm bells at Archegos’ banks, as they realized they were exposed to substantial losses due to the leverage involved in these positions. As a result, the banks demanded additional collateral to offset the higher risk. However, Archegos could not satisfy these requirements, resulting in several banks being forced to sell off Archegos’ holdings, causing further losses for both Archegos and its financial institution partners, such as Credit Suisse (now merged into UBS), and Nomura Holdings.
7. April 2022: The US Department of Justice charged Hwang with 11 criminal offenses, while Archegos’ previous CFO, Patrick Halligan, faced three criminal charges. Authorities accused Hwang and Halligan of lying to banks in order to secure larger credit facilities and then using those funds to manipulate stock prices. Specifically, Hwang faced charges of racketeering, securities fraud against counterparties, securities fraud, and six counts of market manipulation. Halligan was charged with racketeering, securities fraud against counterparties, and three counts of wire fraud. Both men pleaded not guilty to the allegations and were granted bail.
8. May 2024: The trial for Hwang and Halligan commenced. They plan to argue that prosecutors are overstepping their bounds by pursuing an unconventional market manipulation case, claiming that their swaps transactions were legal and did not affect pricing. Additionally, Archegos and Hwang have asserted that the Securities and Exchange Commission (SEC) failed to provide evidence demonstrating that Archegos engaged in deceptive trading practices or that their swaps deals impacted stock prices.
(Source: Reuters, May 8, 2024).
Leave a Reply