Scandal Firm Archegos: "Lies and Manipulation" Brought into the Spotlight

The dramatic collapse of the financial firm Archegos Capital Management in the spring of 2021, which resulted in immense losses for several Wall Street banks, is now being examined in a court case. Bill Hwang, the founder of Archegos, is alleged by a federal prosecutor to be responsible for the fiasco through "lies and manipulation." In his closing argument, Prosecutor Andrew Thomas stated that Hwang deceived both banks and other market participants by means of targeted market manipulation and inflated stock prices to artificially inflate the volume of Archegos. The defense, represented by attorney Barry Berke, countered that the risky trading activities of his client were being criminalized solely due to their negative impact on the banks. Berke clarified: "Mr. Hwang bet on companies in which he believed. That is not manipulative." Bill Hwang, 60 years old, faces 11 charges, including securities fraud, wire fraud, conspiracy, extortion, and market manipulation. If convicted on all counts, he could face a life sentence. The sudden collapse of Archegos not only resulted in nearly $10 billion in losses for Wall Street banks but also decimated much of Hwang's private wealth. The firm, founded in 2013, was a so-called "family office" and operated relatively unobtrusively despite investments amounting to billions and employing dozens of workers. At its peak, Archegos managed $36 billion for Hwang and his family and controlled stocks worth over $100 billion. Through the use of sophisticated derivatives and borrowed funds from Wall Street banks, the firm was able to build immense stock positions and inflate its holdings without falling under strict regulatory oversight.