The founder of a massive hedge fund will now serve 18 years in prison after a judge rejected a bid that called for less time.
In a significant ruling, a federal judge has confirmed the 18-year prison sentence for Bill Hwang, the founder of Archegos Capital Management, rejecting his plea for a more lenient sentence that would allow him to serve part of his time under home confinement.
This decision comes after a hearing held on Thursday in New York, presided over by U.S. District Judge Alvin Hellerstein.
Rejection of Home Confinement Request
During the hearing, Judge Hellerstein addressed Hwang’s request to adjust his sentence to 11.5 years in prison followed by 6.5 years of home confinement.
The judge deemed this proposal impractical, emphasizing that Hwang would be treated like any other defendant, regardless of his health issues.
Hwang, who is 60 years old, had argued that his health warranted a reconsideration of his sentence, especially since a longer prison term would confine him to a higher-security facility that houses violent offenders.
Hellerstein stated, “I will treat Hwang as I treat all other defendants, many of whom have health problems,” reinforcing the idea that the judicial process must maintain consistency and fairness.
Background of the Case
Hwang’s sentencing on November 20 was a culmination of a high-profile trial that has drawn considerable attention on Wall Street.
He was found guilty in July of orchestrating a complex scheme to defraud banks, convincing them to provide Archegos with billions of dollars in trading capacity.
This fraudulent activity enabled Hwang to artificially inflate the value of his holdings until the operation collapsed in March 2021, resulting in substantial losses for the banks involved, totaling approximately $10 billion.
In addition to the lengthy prison sentence, Judge Hellerstein ordered Hwang to pay over $9 billion in restitution to seven banks and a group of former Archegos employees who were owed unpaid salaries and bonuses.
Notably, Credit Suisse Group AG suffered the largest loss at $4.9 billion, followed by Nomura Holdings Inc. at $2.6 billion, and Morgan Stanley at $740.4 million.
Additionally, five former employees claimed losses totaling $10 million.
Financial Implications and Future Prospects
Despite the staggering restitution amount, Hwang’s current net worth is estimated to be around $55 million, making it unlikely that he will be able to pay the full amount ordered by the court.
Federal prosecutors argued against Hwang’s request for a divided sentence, stating that it would not be permissible under the law.
They pointed out that he is likely to be transferred to a minimum-security “camp” after serving about four years and may be released to a halfway house after ten years.
Prosecutors contended that shortening his prison time would be unfair to others convicted of similar offenses, asserting that “it would send precisely the wrong message if wealthy, Wall Street stock manipulators like Hwang were permitted a lower sentence.”
Appeal and Next Steps
Although Hwang has been sentenced, he will not be incarcerated immediately. Judge Hellerstein has allowed him to remain free while he prepares for an expected appeal, a process that could take a year or more.
This case, officially titled US v. Hwang, 22-cr-240, is being handled in the U.S. District Court for the Southern District of New York in Manhattan. As the legal proceedings continue, the implications of this ruling will be closely monitored, both for its impact on Hwang and for its broader significance in the realm of financial regulations and accountability.
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