Explainer-What charges do Archegos founder and former CFO face?
By John McCrank
NEW YORK (Reuters) – Federal prosecutors on Wednesday charged Archegos Capital Administration founder Invoice Hwang with 11 felony counts and the non-public funding agency’s former chief monetary officer, Patrick Halligan, with three counts over Archegos’ collapse a 12 months in the past.
Hwang and Halligan pleaded not responsible in Manhattan federal courtroom on Wednesday.
WHAT ARE THEY ACCUSED OF DOING?
Authorities allege Hwang and Halligan lied to banks to be able to enhance Archegos’ credit score traces and use the borrowed cash to control the inventory costs of corporations within the $36 billion household workplace’s portfolio together with Viacom, Discovery and Tencent Music Leisure.
When Archegos collapsed in March 2021, international banks misplaced round $10 billion.
WHAT ARE THE SPECIFIC CHARGES?
Hwang faces costs of racketeering, securities fraud, securities fraud of counterparties and wire fraud together with seven counts of market manipulation. Halligan is charged with racketeering, wire fraud and securities fraud of counterparties.
WHAT DO RACKETEERING AND MARKET MANIPULATION INVOLVE?
The Division of Justice stated Hwang and Halligan dedicated racketeering conspiracy wherein they arrange an unlawful scheme for revenue.
The market manipulation costs towards Hwang alleged that he engaged in or directed transactions in securities and securities-based swaps to boost or decrease their costs and induce others to buy these securities.
WHAT DO THE FRAUD CHARGES ENTAIL?
Prosecutors alleged the Archegos founder engaged in a securities fraud scheme to construct positions in quite a few shares and manipulate their costs.
Hwang and Halligan had been each charged with securities fraud of counterparties. Prosecutors contend they lied to a number of banks about Archegos’ belongings to be able to acquire extra loans that funded ever bigger positions and saved the securities’ costs inflated.
The 2 males had been additionally charged with wire fraud of counterparties. Wire fraud refers to fraud involving on-line and telecommunications networks.
These costs declare they made false and deceptive statements by way of these means to defraud Archegos’ buying and selling counterparties.
(Reporting by John McCrank; Enhancing by Cynthia Osterman)
