US prosecutors accused fallen family office Archegos of misleading banks about risks immediately before its collapse in early 2021, as part of legal claims to which founder Bill Hwang has pleaded not guilty.
US prosecutors accuse Archegos Capital Management of misleading banks dozens of times in the six months before its collapse in March 2021, according to a «Reuters» report citing a 12-page letter filed in a Manhattan federal court.
Liquidity and concentration risks were allegedly misrepresented in order to access funding for total return swaps from banks including Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, Nomura and UBS.
Not Guilty
According to the letter, a March 24 meeting was held with senior executives including Archegos founder Bill Hwang as well as co-defendant and then chief financial officer Patrick Halligan when the two allegedly told banks that the family office’s inability to meet margin calls was «a liquidity issue, not a solvency issue».
On March 26, counterparties began unwinding Archegos’ positions which eventually led to about $10 billion of bank losses and more than $100 billion of market value erased.
Hwang has pleaded not guilty to 11 charges of fraud, market manipulation and racketeering conspiracy. The next case conference is on September 8 while no trial date has been set yet.
