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Bill Hwang

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Not to be confused with Bill Huang, founder of CloudMinds.
Bill Hwang
Born
Sung Kook Hwang

1964 (age 59–60)
South Korea
EducationUniversity of California, Los Angeles (BA)
Carnegie Mellon University (MBA)
Occupation(s)Investor; trader; convicted fraudster
Known forArchegos Capital Management's 2021 collapse
SpouseBecky Hwang
Children1 daughter
Korean name
Hangul
황성국
Revised RomanizationHwang Seongguk
McCune–ReischauerHwang Sŏngkuk

Sung Kook Hwang[1] (Korean: 황성국), also known as Bill Hwang,[2] is a South Korean-born American investor, trader and convicted fraudster.[3][4] He ran Archegos Capital Management, whose default on March 26, 2021 caused major losses to several notable investment banks. In April 2021, The Wall Street Journal reported that Hwang had lost US$20 billion over 10 days in late March, imposing large losses on his bankers Nomura and Credit Suisse.[5] On April 27, 2022, he was indicted on federal charges of fraud and racketeering.[2] The default of Archegos contributed to the eventual collapse of Credit Suisse.[6]

Early life

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Hwang was born in South Korea in 1964.[7] He immigrated to Las Vegas in 1982 with his parents. In 1983, Hwang and his mother moved to Los Angeles after the death of his father in 1983. He worked night shifts at McDonalds to support his family and fund his education.[8]

Hwang earned a Bachelor of Arts in economics/business from the University of California, Los Angeles, and a Master of Business Administration from the Tepper School of Business at Carnegie Mellon University.[9][10]

Career

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Hwang began his career at Hyundai Securities in New York, then worked at the now defunct Peregrine Investments Holdings, where he met billionaire hedge fund manager Julian Robertson, who was a client and went to work for Robertson's Tiger Management. Robertson closed the fund in 2000. Still, during his time as its owner, he'd provided some of whom he considered to be his most promising employees, known as the "Tiger Cubs",[11] with funding to start their hedge funds. Robertson gave Hwang a starting capital of about $25 million to launch his own Tiger Asia Management fund,[12] which grew to over $5 billion at its peak,[3] before suffering "heavy losses" during the 2007–09 Great Recession.[13]

Insider trading

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In 2012, Tiger Asia Management and Hwang admitted to illegally using inside information to trade Chinese bank stocks and agreed to criminal and civil settlements totaling more than US$60 million. Tiger Asia Management, Hwang, Tiger Asia Partners, and former head trader Raymond Park also paid US$44 million in penalties to the Securities and Exchange Commission.[14][15]

In 2014, Hwang was banned from trading in Hong Kong for four years.[12]

Archegos Capital

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In 2012,[16] Hwang closed Tiger Asia Management, and opened a "family office," which is more lightly regulated than a hedge fund,[14] named Archegos Capital Management.[3] The company managed US$10 billion of funds.

Through the usage of total return swaps, Archegos was able to take highly leveraged positions across multiple companies, as the banks that issued the swaps held the shares on behalf of Archegos. By using swaps, Archegos could circumvent certain disclosure requirements, keeping the scale of its market exposure largely hidden from the public and regulators. In March 2021, losses at Archegos triggered the default and liquidation of positions approaching $30 billion in value, leading to "substantial" losses for Nomura, Credit Suisse, Goldman Sachs, and Morgan Stanley.[14][17] The firm had held prominent positions in ViacomCBS, Baidu, Vipshop, Farfetch, and others. Before the Archegos collapse, Hwang was believed to be worth $10–15 billion, with his investments leveraged at 5:1.[12]

In March 2021, as Archegos Capital Management faced mounting margin calls due to declining stock prices, several prime brokers, including UBS and Credit Suisse, urged Bill Hwang to liquidate positions to mitigate losses. Despite these appeals, Hwang remained confident in his strategy and resisted immediate liquidation. On a conference call with major banks, he expressed optimism about quickly unwinding positions and restoring stability. However, the situation deteriorated rapidly, leading to forced liquidations and significant financial repercussions for the involved banks. [18]

In November 2021, Credit Suisse, having taken a hit of $5.5 billion from the Archegos losses, shut down its prime brokerage business.[19] Texas Capital Bancshares Inc, in which Archegos held a 20% share, plunged after Archegos's collapse.[20]

In January 2024, Hwang sought to block prosecutors from introducing large quantities of trading data at his upcoming trial, citing their "grave failure" in withholding the data for 17 months.[21]

Indictment

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On April 27, 2022, Hwang and his former top lieutenant, Patrick Halligan, were arrested and charged with racketeering, conspiracy, securities fraud, and wire fraud as part of a scheme to harm investors.[22] In a 59-page indictment, Manhattan federal prosecutors alleged that Hwang and Halligan schemed to manipulate stock prices.[22] Lawyers for Hwang and Halligan stated that they were innocent of the charges in the indictment.[22] Hwang was released on a $100 million bond, which was secured by two properties and $5 million in cash. Halligan was released on a $1 million bond.[23]

On September 8, 2022, District Judge Alvin Hellerstein set October 2023 as the month when the trial of Hwang and Halligan, both of whom have pleaded not guilty, will begin. Former Archegos head trader William Tomita and ex-Chief Risk Officer Scott Becker have both pleaded guilty and agreed to testify against Hwang and Halligan.[24] The trial was delayed to February 27, 2024, then to May 6, 2024.[25] On July 10, 2024, a 12-person jury in a federal court in Manhattan found him guilty on 10 out of 11 counts of securities fraud, wire fraud, conspiracy, racketeering, and market manipulation.[26] His sentencing was scheduled for October 28, 2024, but had been postponed to November 20, 2024.[27][28]

News of Hwang’s indictment and the collapse of Archegos Capital attracted significant attention in South Korea, his birthplace, where media outlets extensively covered the event as a high-profile case of a Korean-American financier’s fall from prominence in the U.S. financial sector.

On November 11, 2024, Bob Foresman, a former vice chair of UBS, advocated for leniency on behalf of Hwang's case, citing that Hwang's devotion towards his faith and his philanthropic efforts has been ignored in the trial.[29]

On November 20, 2024 in a Manhattan court, Hwang was sentenced to 18 years in prison.[30] In response to Hwang's attorneys' request for no prison time, Judge Hellerstein noted such a request to be "ridiculous," and that Hwang's sentence was a "symbol to others that if you don't live by the law, you could be punished very severely by the law."[31]

On November 21, 2024 Judge Hellerstein said he would consider reducing the prison sentence for Hwang after his lawyer Barry Herke advocated for serving 6 ½ years in home confinement[32].

Personal life

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Hwang is a Christian and his father was a pastor.[33] Hwang and his wife reside in Tenafly, New Jersey[34] and they have a daughter who attended Fordham University in New York City.[11] Despite his immense wealth, Hwang lived modestly, driving a Hyundai SUV and focusing on his faith and relationship with God—a continuation of his upbringing as the son of a pastor. He hosted regular Scripture readings at his foundation’s Midtown Manhattan offices and supported sessions at Metro Community Church. He explained his approach, stating, 'I try to invest according to the word of God and the power of the Holy Spirit.' This spiritual perspective allegedly influenced both his personal life and investment philosophy, reflecting his claimed commitment to living out his faith.[35]

According to Hwang, his net worth is $55 million, significantly less than the $30 billion during his peak.[36]

Philanthropy

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Hwang co-founded the Grace and Mercy Foundation, a charitable organization, which, by 2018, had reportedly "more than US$500 million in assets."[33] Hwang has been noted as one of the largest benefactors of Christian evangelical organizations and causes.[37] Through the Grace and Mercy Foundation, Hwang has made large contributions to Christian organizations such as Focus on the Family, the Museum of the Bible, The King's College, and megachurches such as Brooklyn Tabernacle, Redeemer Presbyterian Church, and Ravi Zacharias International Ministries.[37]

See also

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References

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  1. ^ "Four Charged in Connection with Multibillion-Dollar Collapse of Archegos Capital Management". The United States Department of Justice. 27 April 2022. Retrieved March 17, 2023.
  2. ^ a b Ramey, Corinne; Pulliam, Susan; Chung, Juliet (27 April 2022). "Archegos Founder Bill Hwang and CFO Charged With Securities Fraud". The Wall Street Journal. Retrieved March 17, 2023.
  3. ^ a b c Who Is Archegos Fund Manager Bill Hwang?
  4. ^ Chatterjee, Lawrence Delevingne, Matt Scuffham, Sumeet (2 April 2021). "Seduced by Archegos' growth, Nomura took a chance on Hwang comeback". Reuters. Retrieved March 17, 2023.{{cite news}}: CS1 maint: multiple names: authors list (link)
  5. ^ Zuckerman, Gregory; Chung, Juliet; Farrell, Maureen (April 1, 2021). "Inside Archegos's Epic Meltdown". The Wall Street Journal. Retrieved March 17, 2023.
  6. ^ "Why did Credit Suisse fail, and what does it mean for banking regulation?". Economics Observatory. Retrieved 2024-04-03.
  7. ^ Burton, Katherine (April 2, 2021). "God and man collide in rise and fall of Bill Hwang's life on Wall Street". Business Standard. Retrieved March 17, 2023.
  8. ^ Kelly, Kate; Goldstein, Matthew; Phillips, Matt; Sorkin, Ross (3 April 2021). "He Built a $10 Billion Investment Firm. It Fell Apart in Days". The New York Times. Retrieved 18 October 2024.
  9. ^ Mohamed, Theron (March 29, 2021). "The man at the heart of the Archegos fiasco is a 'Tiger cub' and devout Christian who pleaded guilty to insider trading. Meet Bill Hwang". Business Insider. Retrieved March 17, 2023.
  10. ^ "Bill Hwang". Focus on the Family. Retrieved 2024-11-16.
  11. ^ a b "Bill Hwang and the Fall of Archegos Capital Management". Value of Stocks. July 1, 2022. Retrieved March 17, 2023.
  12. ^ a b c Celarier, Michelle (28 March 2021). "The Two Tiger Cubs at the Center of Friday's $35 Billion Meltdown". Institutional Investor. Retrieved March 17, 2023.
  13. ^ Jannarone, John (March 29, 2021). "Behind the Archegos Meltdown: How Banks Quickly Got Religion about Bill Hwang". Yahoo!.
  14. ^ a b c Yamazaki, Makiko; Revill, John; Scuffham, Matt (28 March 2021). "Global bank losses may top $6 billion on Archegos downfall". Reuters. Archived from the original on 17 Sep 2024.
  15. ^ "Bill Hwang guilty of illegal trading at Tiger Asia Management". South China Morning Post. 14 December 2012. Retrieved March 17, 2023.
  16. ^ "Familiar Tale as High-Flying Bill Hwang's Tiger Asia Closes". Institutional Investor. August 27, 2012. Retrieved March 17, 2023.
  17. ^ Bray, Chad (29 March 2021). "Investment banks warn of 'significant' losses following margin calls related to Tiger Asia Management founder's family office". South China Morning Post. Retrieved March 17, 2023.
  18. ^ Dolmetsh, Chris; Bob, Van Voris (May 14, 2024). "'Worst Fear': Archegos Witness Recalls Moment That Doom Appeared".
  19. ^ "Credit Suisse to exit prime brokerage following Archegos Capital losses". Archived from the original on 2021-11-04.
  20. ^ "Bill Hwang Made a Huge, Secret Bank Bet Before Archegos Collapse". Bloomberg News. 17 November 2021. Archived from the original on 2021-11-23. Retrieved March 17, 2023.
  21. ^ Stempel, Jonathan (2024-01-09). "Archegos founder Hwang seeks sanctions over prosecutors' 'grave failure' on data". Reuters. Retrieved 2024-02-10.
  22. ^ a b c Goldstein, Matthew (2022-04-27). "Federal agents arrest Archegos owner Bill Hwang and a former top lieutenant". The New York Times. ISSN 0362-4331. Retrieved March 17, 2023.
  23. ^ Berk, Christina Cheddar (2022-04-27). "Archegos owner Bill Hwang and former CFO Halligan plead not guilty to U.S. fraud charges". CNBC. Retrieved March 17, 2023.
  24. ^ Van Voris, Bob (September 8, 2022). "Bill Hwang Gets October 2023 Trial Over Archegos Collapse". Bloomberg News. Retrieved March 17, 2023.
  25. ^ Dolmetsch, Chris (January 22, 2024). "Bill Hwang's Archegos Fraud Trial Delayed to May 6 From Feb. 27". Bloomberg News. Retrieved January 29, 2024.
  26. ^ Goldstein, Matthew (10 July 2024). "Jury Finds Archegos Founder Bill Hwang Guilty of Fraud and Racketeering". The New York Times.
  27. ^ da Silva, João (11 July 2024). "Archegos founder Bill Hwang convicted of fraud". BBC News. Archived from the original on 9 Aug 2024.
  28. ^ "Bill Hwang's Sentencing in Archegos Case Postponed to November". Bloomberg News. 2024-10-15. Retrieved 2024-10-18.
  29. ^ Benny-Morrison, Ava (2024-11-11). "Ex-UBS Vice Chair Joins Leniency Calls for Archegos' Bill Hwang". Bloomberg News. Retrieved 2024-11-12.
  30. ^ Cohen, Luc; Stempel, Jonathan (November 21, 2024). "Archegos' Bill Hwang sentenced to 18 years in prison for massive US fraud". Reuters.
  31. ^ Telesca, Jenna (November 21, 2024). "Archegos Founder Sentenced to 18 Years". The Wall Street Journal. pp. A1, A4. Retrieved November 21, 2024.
  32. ^ Van Voris, Bob; Dolmetsh, Chris (November 22, 2024). "Bill Hwang Judge Considers Reducing 18-Year Prison Sentence". Bloomberg News – via Yahoo Finance.
  33. ^ a b Delevingne, Lawrence (30 March 2021). "Comeback quashed for faith-driven investor Bill Hwang". Reuters. Reuters. Retrieved March 17, 2023.
  34. ^ Aliaj, Ortenca; Platt, Eric; Jung-a, Song; White, Edward (2 April 2021). "'He never struck me as a big risk-taker': Bill Hwang's big bet blows up". Financial Times.
  35. ^ "Bill Hwang Had $20 Billion, Then Lost It All in Two Days". Bloomberg.com. 2021-04-08. Retrieved 2024-11-01.
  36. ^ "Once Worth $30 Billion, Hwang Says He's Just a Millionaire Now". Bloomberg.com. 2024-11-18. Retrieved 2024-11-19.
  37. ^ a b Blair, Leonardo; Reporter, Senior Features (2022-05-05). "Once top benefactor in Evangelical world, billionaire Bill Hwang could spend life in prison after arrest". The Christian Post. Retrieved 2023-03-22.
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