(Reuters) – Federal prosecutors have accused Archegos Capital Management owner Bill Hwang of extortion and fraud as regulators said his manipulation of stock prices cost banks billions of dollars when his “house of cards” collapsed, according to documents released on Wednesday.
Archegos, a family-run office run by former Tiger Asia boss Mr. Hwang, failed with marginal claims in March last year, causing large name banks to incur large losses and triggered a fire sale of shares including ViacomCBS and Discovery Inc.
The blast cost global banks including Credit Suisse, Nomura Holdings, Morgan Stanley and Deutsche Bank more than $ 10 billion in losses.
Prosecutors allege that Hwang, who denies the crime, manipulated the share price of seven of Archego̵7;s portfolio companies, including Viacom, Discovery and Tencent Music Entertainment, according to an indictment filed by the US prosecutor’s office in Manhattan.
The prosecutor says that Hwang did this by deliberately misleading counterparties about the positions that Archegos held and controlling the timing and size of deals to have a greater impact on the price, the indictment said.
A lawyer for Mr Hwang said in a statement that the case had “absolutely no factual or legal basis.”
The US Securities and Exchange Commission filed a separate complaint.
“Archegos engaged in a cheeky plan to manipulate the market,” the SEC said. “Eventually, the weight of the defendants’ fraudulent and manipulative plans became too much for Archegos to bear, and in the space of less than a week at the end of March 2021, the house of cards collapsed.”
Prosecutors said Hwang and the family’s former chief financial officer, Patrick Halligan, “corrupted the family’s operations and operations to manipulate the price of shares they had and lied to banks and realtors, who lost billions on business.”
The SEC said it had sued Mr Hwang, Mr Halligan, chief trader William Tomita and Chief Risk Officer Scott Becker for their alleged roles in the program.