Founder of Archegos arrested – La Liberté

Published on 28.04.2022

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Fraud » The debacle of the American fund leads to the indictment of the person who created it.

The founder of the American fund Archegos, as well as its chief financial officer, were arrested and indicted yesterday for stock market fraud and extortion by a federal court in Manhattan. The setbacks of the organization caused major banks to lose billions of dollars in 2021.

Bill Hwang, who created Archegos, and Patrick Halligan, who managed its finances, are accused of seeking to manipulate the market and mislead investors. The revelation of the scandal had caused the implosion of the fund in March 2021 and created a wave of shocks on Wall Street.

The prosecutor of the Southern District of New York, Damian Williams, explains, in a court document of 59 pages, that the capital of Archegos, consisting essentially of the personal fortune of Bill Hwang, grew from 1.5 billion to more than 35 billion dollars between March 2020 and March 2021.

The prosecutor explains that to arrive at these figures, Bill Hwang and his collaborators resorted to “manipulative and fraudulent methods which left the Archegos portfolio vulnerable to the price fluctuations of a handful of stocks”.

Archegos had used derivative products, the total return swaps, to bet big on certain stocks, without having to buy them directly. This had allowed him to accumulate bets in a few companies through several banks. When equities began to fall, these banks had to urgently liquidate their positions and, for some, record heavy losses. ATS/AWP

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