Archegos’ collapse sent shockwaves through Wall Street and sparked regulatory investigations on three continents. Prosecutors allege that Messrs. Hwang and Halligan lied to banks, obtained billions of dollars, and artificially inflated the stock prices of several publicly traded companies. The trial began in May.
Hwang, 60, had pleaded not guilty to one count of organized crime conspiracy, three counts of fraud and seven counts of market manipulation. Harrigan, 47, had pleaded not guilty to one count of organized crime conspiracy and two counts of fraud. Harrigan was Archegos’ chief financial officer.
They currently face up to 20 years in prison for each charge they were convicted of, but the sentences will likely be much lighter than that and will be imposed by a judge based on a variety of factors.
When the charges were filed in 2022, the Justice Department called the case an example of its determination to hold accountable those who distort and defraud U.S. financial markets.
Jurors heard closing arguments Tuesday.
The trial focused on the collapse of Hwang’s family office, Archegos, which caused $10 billion in losses to banks around the world and, according to prosecutors, more than $100 billion in losses to shareholders of its portfolio companies. Prosecutors said Hwang’s conduct harmed U.S. financial markets and the investing public, and caused significant losses to banks, market participants and Archegos employees.
Prosecutors said Hwang secretly held huge stakes in several companies without actually owning any of the stock. He lied to banks about the size of Archegos’ derivatives trades to borrow billions of dollars that he and his subordinates then used to artificially inflate the prices of the underlying shares, prosecutors said.
Prosecutors accused Harrigan of lying to the bank and aiding in the criminal scheme.
In closing arguments, Assistant U.S. Attorney Andrew Thomas told jurors, “By 2021, the defendants’ lies and manipulation had led to a $100 billion fraud that compromised the stocks of nearly 10 companies and half of Wall Street, and that fraud collapsed within days.”
Hwang’s defense team called the indictment “the most aggressive open market manipulation case ever brought by a U.S. prosecutor.” In his closing arguments, Hwang’s lawyer, Barry Burke, told the jury that prosecutors had criminalized aggressive but legal trading techniques.
Archegos’ head trader William Tomita and chief risk officer Scott Becker testified as prosecution witnesses after pleading guilty to related charges and agreeing to cooperate in the case.
Hwang’s assets eclipsed those of the two companies’ biggest investors, driving up their stock prices, according to the U.S. Attorney’s Office for the Southern District of New York, which filed the case. At its peak, Archegos had $36 billion in assets and $160 billion in equity exposure, prosecutors said.
When stock prices fell in March 2021, the banks asked for more deposits, but Archegos couldn’t make them. The banks then sold the shares backing Hwang’s swaps, wiping out $100 billion in shareholder wealth and billions of dollars in bank assets, including $5.5 billion in assets at Credit Suisse, now owned by UBS, and $2.9 billion at Nomura Holdings.
