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Fraud allegation: Sung Kook ‘Bill’ Hwang is the founder of Archegos Capital Management
Former financier Sung Kook “Bill” Hwang has been found guilty of fraud and market manipulation three years after his £28bn private equity firm collapsed.
Hwang, the founder of Archegos Capital Management, was convicted on 10 of 11 criminal charges in a New York court.
Patrick Halligan, his deputy and co-defendant, was also found guilty on three counts. Archegos used risky financial instruments to make big bets on a handful of stocks, but ran into trouble in early 2021 after some stocks fell in value.
It had borrowed large sums of money from banks to buy a larger exposure than it could otherwise afford.
But when the stock fell, investors demanded that Hwang give them more money as collateral, but he defaulted on the loans, giving them the right to sell the shares to recover the money he owed them.
This triggered a sell-off of around £20bn as Goldman Sachs, Morgan Stanley, UBS and the now-defunct Credit Suisse quickly dumped their shares.
The fund collapsed in March 2021. Credit Suisse lost £4.3bn. Prosecutors said the two men lied to banks. Sentencing is due on 28 October.
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