{"id":63866,"date":"2023-09-21T05:12:38","date_gmt":"2023-09-21T09:12:38","guid":{"rendered":"https:\/\/ifintechworld.com\/uncategorized\/archegos-founder-hwang-must-face-sec-fraud-charges\/"},"modified":"2023-09-21T05:12:42","modified_gmt":"2023-09-21T09:12:42","slug":"archegos-founder-hwang-must-face-sec-fraud-charges","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=63866","title":{"rendered":"Archegos founder Hwang must face SEC fraud charges"},"content":{"rendered":"
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\u00a9 Reuters. FILE PHOTO: Sung Kook (Bill) Hwang, the founder and head of a private investment firm known as Archegos exits the Manhattan federal courthouse in New York City, U.S., April 27, 2022. REUTERS\/Shannon Stapleton\/File Photo<\/span>
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By Jonathan Stempel<\/p>\n

NEW YORK (Reuters) – A federal judge on Tuesday rejected Bill Hwang’s bid to dismiss a U.S. Securities and Exchange Commission lawsuit accusing him of fraud that led to the March 2021 collapse of his $36 billion firm Archegos Capital Management.<\/p>\n

U.S. District Judge Paul Oetken in Manhattan said the SEC plausibly alleged that Hwang and Archegos, which is also a defendant, intentionally concealed the risks they were taking in their bid to manipulate markets through swaps transactions and to artificially inflate the value of their largest stock holdings.<\/p>\n

Oetken dismissed some fraud-based claims against former Archegos Chief Financial Officer Patrick Halligan, while letting the SEC pursue claims that Halligan aided and abetted fraud by former Archegos risk management chief Scott Becker.<\/p>\n

The judge also granted a request by the U.S. Department of Justice to put the SEC civil case on hold while it pursues related criminal charges against Hwang and Halligan.<\/p>\n

Oetken in a separate decision dismissed a U.S. Commodity Futures Trading Commission civil lawsuit against Archegos and Halligan, saying the regulator lacked power to sue over the swaps.<\/p>\n

Becker and William Tomita, who was Archegos’ head trader, have pleaded guilty in the criminal case. Hwang’s and Halligan’s trial is scheduled to start on Feb. 20, 2024.<\/p>\n

Lawyers for Hwang and Archegos did not immediately respond to requests for comment.<\/p>\n

Mary Mulligan, a lawyer for Halligan, said she was pleased with the dismissal of several claims and would “continue to fight the deeply flawed allegations against our client.”<\/p>\n

Archegos’ March 2021 collapse stemmed from Hwang’s use of total return swaps, a type of financial contract, to achieve what the SEC called “dominant” positions in his top 10 holdings, including ViacomCBS (NASDAQ:) and Discovery (NASDAQ:).<\/p>\n

Authorities said Hwang borrowed aggressively to gain additional trading capacity and eventually had $160 billion of exposure to stocks.<\/p>\n

But when prices began falling, Hwang was unable to meet margin calls, leading banks to dump stocks backing his swaps.<\/p>\n

This caused big losses for Archegos and banks such as Credit Suisse, now part of UBS, and Nomura Holdings <\/span><\/span> (NYSE:).<\/p>\n

Hwang was arrested in April 2022, and U.S. District Judge Alvin Hellerstein in Manhattan refused in March to dismiss his 11-count criminal indictment.<\/p>\n

Hwang in seeking a dismissal argued that his trading had been lawful, and that prosecutors essentially entrapped him by inducing him to cooperate long after deciding quietly that he was their target.<\/p>\n

The cases are SEC v. Hwang et al, U.S. District Court, Southern District of New York, No. 22-03402; and CFTC v Archegos Capital Management LP et al in the same court, No. 22-03401. <\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a9 Reuters. FILE PHOTO: Sung Kook (Bill) Hwang, the founder and head of a private investment firm known as Archegos exits the Manhattan federal courthouse in New York City, U.S., April 27, 2022. REUTERS\/Shannon Stapleton\/File Photo By Jonathan Stempel NEW YORK (Reuters) – A federal judge on Tuesday rejected Bill Hwang’s bid to dismiss a […]<\/p>\n","protected":false},"author":1,"featured_media":7482,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[1],"tags":[83],"class_list":["post-63866","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-uncategorized","tag-featured","post_format-post-format-video"],"yoast_head":"\nArchegos founder Hwang must face SEC fraud charges | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u00a9 Reuters. 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