Bill Hwang, the former billionaire investor behind Archegos Capital Management, could face a lengthy prison sentence following his conviction over the firm’s 2021 collapse, which caused more than $10 billion in losses for Wall Street banks.
Hwang, 60, was convicted in July on 10 criminal charges, including wire fraud, securities fraud, and market manipulation, and will be sentenced on Wednesday by U.S. District Judge Alvin Hellerstein in Manhattan, Reuters reports.
Prosecutors are seeking a 21-year prison term, alongside the forfeiture of $12.35 billion and restitution for victims.
Hwang has requested no prison time, forfeiture, or restitution, arguing that he poses no flight risk or threat to the community while he appeals the conviction.
The downfall of Archegos occurred in March 2021, taking less than a week and shocking Hwang’s lenders. The collapse marked the fall of the protege of hedge fund billionaire Julian Robertson.
Hwang founded Archegos in 2013 as a family office after his previous hedge fund, Tiger Asia Management, pleaded guilty to wire fraud in an insider trading case.
Prosecutors claimed that Hwang lied to banks about Archegos’ portfolio, enabling him to aggressively borrow and place concentrated bets on stocks like ViacomCBS (now Paramount Global).
Despite managing $36 billion, Hwang’s borrowing caused $160 billion in stock exposure.
Hwang’s downfall occurred when he could not meet margin calls, as some of his preferred stocks lost value. Several banks were affected, including Credit Suisse, which incurred a $5.5 billion loss, and Nomura Holdings.
In seeking a 21-year sentence, prosecutors described Hwang as an “unrepentant recidivist,” noting that he had shown no remorse and “judged himself blameless.”
They stressed the need for a stern sentence to deter other investors from breaking the law.
Hwang’s defence argued that the prosecution did not prove his alleged lies caused the losses and highlighted his age, health, and low recidivism risk as reasons for no prison time.
His legal team also pointed to his Christian faith and the work of his nonprofit, Grace and Mercy Foundation, which has donated over $600 million since 2006 to causes such as homelessness and human trafficking.
Hwang’s net worth has reportedly fallen to “at most” $55.3 million.
A 21-year sentence would be unusually long for a white-collar crime case in the U.S., only four years shorter than the sentence given to FTX founder Sam Bankman-Fried for stealing billions from customers.
Hwang’s co-defendant, former Archegos CFO Patrick Halligan, was convicted on three charges and is scheduled for sentencing in January.
Neither Hwang nor Halligan testified during their two-month trial.