[3][4] In April 2021, The Wall Street Journal reported that Hwang lost US$20billion over 10 days in late March, imposing large losses on his bankers Nomura and Credit Suisse. Federal prosecutors said Hwang used Archegos as an instrument of market manipulation and fraud, inflating its portfolio from $1.5 billion to $35 billion before its spectacular collapse, causing massive losses for banks and investors.). "The failure of Archegos underscores the importance of our ongoing work to update the security-based swaps market to enhance the investor protections, integrity, and transparency of this market. By mid-March, as the stock moved toward $100, Mr. Hwang had become the single largest institutional investor in ViacomCBS, according to those people and a New York Times analysis of public filings. [5], On March 26, 2021, Archegos defaulted on margin calls from several global investment banks, including Credit Suisse and Nomura Holdings,[6][7] as well as Goldman Sachs and Morgan Stanley. The charges unsealed in an indictment in Manhattan federal court named Sung Kook "Bill" Hwang, the founder of Archegos Capital Management, and his former chief financial officer, Patrick Halligan . Bloomberg via Getty Images. What do we know about Mr. Hwang? His is a proverbial American rags-to-riches story. The foundations net assets are listed in its latest filing at $470 million, after paying for operating expenses and gifts to nonprofit groups over the years. Halligan was released on a $1 million bond. But Archegos, a so-called family office that managed the fortune of the former hedge fund manager Bill Hwang, did not publicly file such a document called a 13F in its eight-year history. "I don't think its common for family offices to take such an aggressive strategy," says Tayyab Mohamed, co-founder of Agreus, a recruitment consultancy for family offices. [34] Lawyers for Hwang and Halligan stated that they were innocent of the charges in the indictment.[34]. This meant that Archegos did not need to disclose its large holdings, while if it had transacted in regular stocks it would have had to. Bloomberg Surveillance, covering the latest news in finance, economics and investments. Got a confidential news tip? But when their share prices fell, banks called in their loans and Archegos defaulted, starting a domino effect that has cost nearly $20 billion to date and caused Archegos's own insolvency. Goldman Sachs, which had lent to him at Tiger Asia, initially refused to deal with Archegos. Credit Suisse, which had acted too slowly to stanch the damage, announced the possibility of significant losses; Nomura announced as much as $2 billion in losses. "There's a lobby now for increased regulations for family offices which is contradictory to every fabric of their DNA because family offices by definition don't want to be regulated and they want to have discretion and privacy," says Mohamed. Most of the money he put into the foundation came in the form of blue-chip growth stockshe has donated more than a million Netflix shares and hundreds of thousands of shares of Amazon. Hwang donated $16 million in the latest year to Korean Christian causes. Archegos Capital Managements net capital essentially Bill Hwangs wealth had reached north of US$10 billion. Banks were eager to do business with Bill Hwang and his Archegos Capital Management until he ran out of money. It was the first hint from a major regulator that it was looking into the issue of family offices. Hwang, who was arrested early Wednesday by federal officers, will be released on $100 million bail he made by paying $5 million in cash and using two properties to secure the bond. That same year, Tiger Asia pleaded guilty to federal insider-trading charges in the same investigation and returned money to its investors. Other family offices teamed together on "club deals" to buy out medium sized businesses. He previously worked as an equity analyst at Tiger Management, as well as an institutional equity sales person at both Peregrine Securities and Hyundai Securities. According to an SEC Complaint dated December 12, 2012, Bill Hwangs age was listed as 48, residing in Tenafly, New Jersey. Mr. Hwang, a 57-year-old veteran investor, managed $10 billion through his private investment firm, Archegos Capital Management. Hwang and his wife reside in Tenafly, New Jersey. The grants primarily went to religious-affiliated institutions and nonprofitsHwang has been vocal about how his Christian faith inspires his investments. Turmoil at Archegos Capital Management, the investment firm of former hedge-fund manager Bill Hwang, is rattling the financial world. [25] Later, the bank announced that it would have to raise up to $2 billion in fresh capital to support its equity base. By the beginning of this year, Mr. Hwang had grown fond of a handful of stocks: ViacomCBS, which had pinned high hopes on its nascent streaming service; Discovery, another media company; and Chinese stocks including the e-cigarette company RLX Technologies and the education company GSX Techedu. [7], 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. (This story was originally published on April 8, 2021. He also contributed smaller amounts of stock in Facebook, Expedia and Hawaiian Airlines. Cottorone heads research for a foreign single family office in Taiwan and is a private equity committee member at AmCham Taiwan. [7][14][15] In 2014, Hwang "was banned from trading in Hong Kong for four years. You may opt-out by, Housing Costs Will Determine Inflation In 2023, Heres Why, The Post-Global Economy Will Be Better Than You Think, Five Small Stocks That Should Whet Investors Appetite Now, Russell 2000 Index Weakens As Bank Components Take It Down, Microsoft, Merck And 36 More Stocks With At Least 30% Return On Equity, Hong Kong Rises On Signs Of Consumer Comeback, Stock Market Warning Signs Mount As State Street And Roblox Suffer Steep Losses After Earnings, This New Poll Shows Why Bank Stocks Are Primed To Soar. Language links are at the top of the page across from the title. Robertson closed the fund in 2000 but, 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",[8] with funding to start their own hedge funds. Within a few years, he built the modest operation to a multibillion-dollar empire. Is Bill Hwang married? [16], On March 30, Mitsubishi UFJ Financial (MUFG) securities arm declared a $300 million loss in its EMEA operations linked to Archegos. MS At the same time, investors who had received larger-than-expected stakes in the new share offering and had seen it fall short, were selling the stock, driving its price down even further. [6], Hwang earned an economics degree from UCLA, and an MBA from the Tepper School of Business at Carnegie Mellon University. https://www.nytimes.com/2021/04/03/business/bill-hwang-archegos.html. Archegos . But hes doing it in a very unassuming, humble, non-boastful way.. But so much money has proved irresistible to banks. The Fuller Foundation and Fuller Theological Seminary, a Pasadena, California school where Hwang serves on the board of trustees, are the foundations biggest beneficiaries, having received a total of $14 million. The arrangement shielded Archegos from regulatory scrutiny because of its lack of public investors. I cover European and global business news. 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. "Family offices are one of the biggest investors out there; they create liquidity for a lot of start-ups, a lot of innovative ideas," says Mohamed. I always blame people who set up U.C.L.A. He built the assets into US$10 billion, according to a source familiar with the situation. [19][20], The fate of Archegos has been compared to the meltdown caused by Long Term Capital Management. [4] On April 27, 2022 Hwang was indicted and arrested on federal charges of fraud and racketeering. Before Archegos, Hwang built New York-based hedge fund Tiger Asia Management which focused on Asian investments. Its hard to know for sure to what extent Hwangs hidden fortune was battered last week, though his charitys filings in future years will show how much the crisis impacts his generosity. "Today, we charged Archegos Capital Management and affiliated individuals withcommitting fraud andmanipulating stock prices using total return swaps. The foundation, where Bill Hwangs wife Becky serves as a director, had nearly US$500 million in assets in 2018, according to a public disclosure. However, there are more and more of these "aggressive" family offices entering the market, he adds. Morgan Stanley, Credit Suisse and Nomura have all since replaced their prime brokerage chiefs in the wake of the destruction, while the Department of Justice and the Securities and Exchange Commission have bothopened investigations. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. A Division of NBCUniversal. He was a protege and one of the so-called tiger cubs of legendary hedge fund manager Julian Robertson who mentored and supported some of the best-performing investors including Stephen Mandel, Lee Ainslie andChase Coleman. The new firm, which also invested in both U.S. and Asian stocks, was similar to a hedge fund, but its assets were made up entirely of Mr. Hwangs personal wealth and that of certain family members. A former protg of famed investor Julian Robertson, Hwang opened his family office in 2013 after shuttering two hedge funds following an SEC insider trading probe in 2012. He was born in 1965. Baidu was added to the list of affected stocks. Of the $1.7 million it has donated to the nonprofit Holy Name Medical Center in Teaneck, N.J., $750,000 was earmarked for its Korean Medical Program, which employs Korean-American physicians and volunteers to help mitigate language and cultural barriers for patients in the community. In parallel actions, the U.S. Attorneys Office for the Southern District of New York today announced criminal charges for similar conduct, and the Commodity Futures Trading Commission (CFTC) announced civil charges. Bill Hwangs age is 56 years as of March 2021. Nor are any two family offices the same. As disposals keep emerging, estimates of his firms total positions keep climbing: tens of billions, US$50 billion, even more than US$100 billion. Sung Kook Hwang immigrated to the U.S. from South Korea in 1982 and took the English name Bill. [6] A press release from Credit Suisse said that "the loss resulting from this exit could be highly significant and material to our first quarter results. The fund was also heavily leveraged and did business with multiple banks which were likely unaware of Archegos' large positions held by other banks. Get this delivered to your inbox, and more info about our products and services. Intelligence. Credit Suissesaid the loss resulting from this exit could be "highly significant and material" to its first-quarter results. MUFG EMEA, whose losses in the Hwang affair totalled about $300 million, only posted a profit in 2019 of $84 million. He borrowed billions of dollars from Wall Street banks to build enormous positions in a few American and Chinese stocks. Credit Suisse Group AG and Japan's Nomura Holdings Inc took the main hit, with reported losses of $5.5 billion and $2 billion, respectively. The reasons arent entirely clear, but RLX, the Chinese e-cigarette company, and GSX, the education company, had both spiraled in Asian markets around the same time. Mr. Hwang declined to comment for this article. However, Archegos head trader William Tomita and director of risk management Scott Becker have both pled guilty and are cooperating with investigators, Manhattan US Attorney Damian Williams said at a Wednesday press conference. New York-based Archegos cost six banks (Credit Suisse CS +1.3%, Nomura, Morgan Stanley MS +0.4%, UBS, MUFG, and Mizuho) more than $10 billion when it defaulted on a margin call in March. Disgraced hedge fund mogul Bill Hwang "resorted to reckless and illegal trading" that spurred billions of dollars in losses for big Wall Street banks even as he invoked Christianity and urged. [2], Hwang was born in South Korea in 1964. The Securities Exchange Commission and the Financial Conduct Authority also have requested information about the implosion from the lenders, as well as the NGO Self-regulatory organization Finra. CS It triggered a domino effect where prime brokers rushed to exit the positions on Archegos' behalf and resulted in a massive margin call. He is married to his wife Becky Hwang. Archegos Capital Management's leveraged bets inViacomCBS blew up and ignited a whopping $20 billion wave of forced liquidations at a slew of Wall Street banks, some of which face losses that could be "highly significant.". The SEC acknowledges the assistance and cooperation of the U.S. Attorneys Office for the Southern District of New York, the FBI, and the CFTC. Goldman finished unwinding its position but did not record a loss, a person familiar with the matter said. The SEC also seeks to bar individual defendants from serving as a public company officer and director. Meet Bill Hwang", "Bill Hwang and the Fall of Archegos Capital Management", "The Two Tiger Cubs at the Center of Friday's $35 Billion Meltdown", "Behind the Archegos Meltdown: How Banks Quickly Got Religion about Bill Hwang", "Global bank losses may top $6 billion on Archegos downfall", "Bill Hwang guilty of illegal trading at Tiger Asia Management", "Familiar Tale as High-Flying Bill Hwang's Tiger Asia Closes", "Investment banks warn of 'significant' losses following margin calls related to Tiger Asia Management founder's family office", "Credit Suisse to exit prime brokerage following Archegos Capital losses", "Bill Hwang Made a Huge, Secret Bank Bet Before Archegos Collapse", "Federal agents arrest Archegos owner Bill Hwang and a former top lieutenant", "Archegos owner Bill Hwang and former CFO Halligan plead not guilty to U.S. fraud charges", "Bill Hwang Gets October 2023 Trial Over Archegos Collapse", "Comeback quashed for faith-driven investor Bill Hwang", "Once top benefactor in Evangelical world, billionaire Bill Hwang could spend life in prison after arrest", https://en.wikipedia.org/w/index.php?title=Bill_Hwang&oldid=1148294930, University of California, Los Angeles alumni, Short description is different from Wikidata, Creative Commons Attribution-ShareAlike License 3.0, This page was last edited on 5 April 2023, at 08:11. Hwang, who founded Archegos as a family office in 2013, used borrowed money to make large bets on some stocks until Wall Street banks forced his firm to sell over $20 billion worth of shares after . [10], In 2012, Tiger Asia Management and Hwang admitted to illegally using inside information to trade Chinese banks' stocks, and agreed to criminal and civil settlements totaling more than US$60 million. He then worked for about six years at a South Korean financial-services firm in New York, eventually landing a plum job as an investment adviser for Julian Robertson, the respected stock investor whose Tiger Management, founded in 1980, was considered a hedge fund pioneer. "But the house of cards could only be sustained if that cycle of deceptive trading, lies and buying power continued uninterrupted, and once Archegoss buying power was exhausted and stock prices fell, the entire structure collapsed, allegedly leaving Archegoss counterparties billions in trading losses.". The foundation has donated tens of millions of dollars to Christian organizations. [9] Other banks, such as Deutsche Bank, were able to close their substantial positions quickly and avoid any losses. 2023 NYP Holdings, Inc. All Rights Reserved, Goldman Sachs, JPMorgan snag talent from struggling Swiss bank: report, Disgraced financier Bill Hwang pushed Christianity on employees as empire collapsed: suit, Archegos cubs fund up-and-running less than a year after Hwangs fall, Credit Suisse abandons hedge fund clients after Archegos disaster. The Man Who Lost $20 Billion in Two Days Is Lying Low in New Jersey. [32][33], On April 27, 2022, Hwang and former Archegos CFO, Patrick Halligan, were arrested and charged with racketeering conspiracy, securities fraud, and wire fraud in connection the company's 2021 collapse. Since 2014, HWANG has run Archegos as a private hedge fund or "family office," meaning that Archegos, unlike other large hedge funds, was not required to tell regulators . Archegos Capital Management was a limited partnership family office that managed the personal assets of Bill Hwang, [2] [3] at one time managing over $36 billion in assets. Hwang was a protege and one of the so-called tiger cubs. In 2012, Hwang pleaded guilty to insider trading of Chinese bank stocks and agreed to pay $44 million to settle civil allegations. The move spurred a frantic, market-melting fire sale that left Credit Suisse with more than $5 billion in losses and Japanese bank Nomura with $3 billion in losses. Bill Hwang has given more than $500 million to his Grace & Mercy Foundation since 2015. On Thursday 8 May, the U.S. Federal Reserve warned that "measures of hedge fund leverage may not be capturing important risks," in a comment aimed at Archegos-style firms. In 2012, Mr. Hwang reached a civil settlement with U.S. securities regulators in a separate insider trading investigation and was fined $44 million. About 15 miles from midtown Manhattan, the head of Archegos is groping for answers in the wake of one of the biggest debacles . The foundation has also donated $2.4 million since 2016 to the Museum of the Bible, a museum in Washington D.C. funded largely by Hobby Lobbys billionaire founder David Green and his family that opened in 2017. This is creating turmoil within the family office sector, with the more cautious types blaming Archegos and other large family offices bringing about some very unwelcome changes. Bill Hwang Family His father, a pastor, died at the age of 50, according to a 2018 interview with Hwang in the South Korean Kukmin Ilbo newspaper. Hwangs foundation has given millions to Christian humanitarian charities, including Hope for New York and the Bowery Mission, as well as the Redeemer Presbyterian Church, the Brooklyn Tabernacle megachurch, Christian liberal arts school The Kings College, and many more churches and missionary organizations nationwide. 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