New York, United States:
The founding father of US funding agency Archegos, Invoice Hwang, was jailed for 18 years on Wednesday for a multibillion-dollar fraud that contributed to the fund’s 2021 implosion, US media reported.
In July, a jury in New York convicted South Korean-born Hwang on 10 of the 11 fees he confronted and for which he may have been sentenced to spend the remainder of his life in jail.
“The sentence has to replicate the seriousness of the occasion,” mentioned decide Alvin Hellerstein in line with The New York Instances, which additionally reported the 18-year jail sentence.
Hwang’s family-owned hedge fund had taken large bets on just a few shares with cash borrowed from banks, and when a kind of bets soured, the fund was unable to fulfill “margin calls” to cowl the losses.
The next collapse of the fund despatched shockwaves by way of the markets and brought about $10 billion in losses for Credit score Suisse, Nomura, Morgan Stanley and different massive monetary establishments.
Credit score Suisse was the toughest hit, shedding some $5.5 billion, which additional weakened the financial institution and pushed it near chapter in 2023 earlier than it was taken over by its Swiss rival UBS.
Throughout the case, the prosecution relied on two former Archegos executives, with one testifying that Hwang had instructed him to misrepresent the fund’s funds.
The case took place after Archegos took stakes in a number of firms with the purpose of driving up share costs, together with in ViacomCBS, which is now Paramount International.
At its peak in March 2021, Archegos was uncovered to $160 billion by way of derivatives.
The plan labored initially — nearly quadrupling the worth of ViacomCBS — however rapidly unraveled when that firm introduced a capital improve in 2021, triggering a sudden sell-off on Wall Avenue.
This began a domino impact that plunged the worth of shares held by Archegos and in flip hit the banks that had supplied funds to Hwang’s agency.
(Aside from the headline, this story has not been edited by EDNBOX employees and is revealed from a syndicated feed.)