Just before Archegos' epic collapse in late March, Hwang was managing a portfolio valued at between $10 billion and $15 billion, Wall Street traders estimate. We live in purgatory: My wife has a multimillion-dollar trust fund, but my mother-in-law controls it. [5], Hwang was born in South Korea in 1964. The S.E.C. In 2008, Tiger Asia lost money when the investment bank Lehman Brothers filed for bankruptcy at the peak of the financial crisis. He also loaded up on Chinese tech companies such as Baidu and GSX Techedu. Bill Hwang, chief executive officer and founder of Archegos Capital Management LP, left, departs federal court in New York, U.S., on Wednesday, April 27, 2022. This scheme was historic in scope, said Damian Williams, U.S. attorney for the Southern District of New York. But it all came crashing down when Hwang's highly leveraged bets started to go awry. The firms head trader, William Tomita, made his own plea to Hwang, only to return with his tail between his legs: I spoke to Bill and he said to just keep working the orders. (Both have pleaded guilty and are cooperating with authorities.). Born in South Korea, Hwang immigrated to the U.S. after high school. In June 2020, when asked in a text message by an Archegos analyst whether ViacomCBSs stock price improvement that day was a sign of strength Hwang responded, No. The foundation had assets approaching $500 million at the end of 2018, according to its latest filing. The publication added that as disposals keep emerging, estimates of his firms total positions keep climbing: tens of billions, $50 billion, even more than $100 billion before the fortune evaporated in mere days. The Wall Street Journal reported that Hwang lost US$20 billion over 10 days in late March 2021, imposing large losses on his bankers Nomura and Credit Suisse. JPMorgan refused. Its a tale as old as Wall Street itself, where the right combination of ambition, savvy and timing can generate fantastic profits only to crumble in an instant when conditions change. Then buy some more. The heavy borrowing ballooned Mr. Hwangs portfolio to $35 billion from $1.5 billion in a single year, prosecutors said, and the effective size of his firms stock positions swelled to $160 billion rivaling some of the biggest hedge funds in the world. Im 66, we have more than $2 million, I just want to golf can I retire? See also: Hwangs Archegos deceived Wall Street firms, federal government says. But what is Bill Hwangs net worth? A 59-page indictment, filed in federal court in Manhattan, alleges the men and others at Archegos sometimes timed their trades to drum up the interest of other investors, while borrowing money to make bigger and bigger bets. These positions allegedly enabled Archegos to manipulate the prices of these stocks higher, especially when considering that passive index funds, which controlled much of the remaining outstanding shares, do not buy and sell securities based on market performance. All the while, Becker was pulling as much money from Wall Street banks as possible, falsely claiming that the family office had $9 billion in excess cash while it was running on fumes. [8], In 2012,[13] Hwang closed Tiger Asia Management, and opened a family office, Archegos Capital Management,[2] which managed US$10 billion of family money. Similar to Morgan Stanley, UBS incurred a relatively small loss in comparison to . Scott Becker, the chief risk director, protested. Here are the 5 most interesting details from the indictment: Between March 2020 and the week of March 22, 2021, Archegos capital essentially Hwangs personal fortune increased from approximately $1.5 billion to more than $35 billion, the indictment alleges. Most if not all of it was his own. "All plans are being discussed as Mr. Hwang and the team determine the best path forward.". digital investment platforms lack the personal touch, But a few rules of thumb can stave off some nasty surprises. It also increased the scrutiny of the way that Mr. Hwang, who cut his teeth at the pioneering hedge fund Tiger Management, made his bets. Family offices don't have to disclose investments, unlike traditional hedge funds. Hwang referred to this practice as using bullets, according to the indictment. On Wednesday, federal prosecutors and securities regulators laid out what they had found: a stock manipulation scheme they called staggering in its size and brazen in its execution. Lines and paragraphs break automatically. Hwang's firm Archegos Capital Management was forced to sell. Hwang's most recent ascent can be pieced together from stocks dumped by banks in recent days -- ViacomCBS Inc., Discovery Inc. GSX Techedu Inc., Baidu Inc. -- all of which had soared this year, sometimes confounding traders who couldn't fathom why. Bill Hwang has found himself at the centre of a huge margin call that affected the shares of major banking investment companies. Then his luck ran out. He graduated barely, he said and pursued a master of business administration at Carnegie Mellon University in Pittsburgh. Bipartisan bill to make daylight-saving time permanent rolled out again. Republican presidential hopeful Nikki Haley speaks at the annual Conservative Political Action Conference that's taking place just outside Washington, D.C. Visit a quote page and your recently viewed tickers will be displayed here. Li also bet heavily on GSX. In 2012, Hwang pleaded guilty to insider trading and closed down his Tiger Asia Management fund. All Rights Reserved. Hwang is a trustee of the Fuller Theology Seminary, and co-founder of the Grace and Mercy Foundation, whose mission is to serve the poor and oppressed. Goldman then followed suit, selling billions of dollars of companies' stock. https://www.wealthmanagement.com/sites/wealthmanagement.com/files/logos/Wealth-Management-Logo-white.png, Archegos Capital Management owner Bill Hwang. Amid the largest meltdown of a firm Wall Street has witnessed since the global financial crisis, it wasn't just banks that lost billions. Mr. Hwang, a 57-year-old veteran investor, managed $10 billion through his private investment firm, Archegos Capital Management. In 2012, Mr. Hwang reached a civil settlement with U.S. securities regulators in a separate insider trading investigation and was fined $44 million. +1.51% On April 27, 2022, he was indicted on federal charges of fraud and racketeering in the same matter. Hwangs Archegos deceived Wall Street firms, federal government says, Its a sign of me buying. Inside the indictment of Archegos owner Bill Hwang. Bloomberg the Company & Its Products Bloomberg Terminal Demo Request Bloomberg Anywhere Remote Login Bloomberg. By Thursday's close, the value of the portfolio fell 27% -- more than enough to wipe out the equity of an investor who market participants estimate was six to eight times levered. A religious man, Mr. Hwang established the Grace and Mercy Foundation, a New York-based nonprofit that sponsors Bible readings and religious book clubs, growing it to $500 million in assets from $70 million in under a decade. The chaotic story portrayed in the 59-page indictment charts a rapid rise and fall in riches unlike anything Wall Street has ever seen. The man who was once worth over $30 billion had lost $20 billion in two days leaving Bill Hwang's net worth at $10 billion. On this Wikipedia the language links are at the top of the page across from the article title. Anyone can read what you share. Even as his fortune swelled, the 50-something kept a low profile. "This is a challenging time for the family office of Archegos Capital Management, our partners and employees," Karen Kessler, a spokesperson for the firm, said in an emailed statement. ", Archegos was unavailable for comment but spokesperson Karen Kessler told Reuters at the end of March: "This is a challenging time for the family office of Archegos Capital Management, our partners and employees.". Lee said Hwang, who he has known for many years, is "easily in the top 10 of the best investment minds" that he knows. No one was focusing on Korea back then and we hired him soon after., In other news, Who is Patrick Wojahn? We earn $400,000 and spend beyond our means. Have something to tell us about this article? Until recently, Bill Hwang sat atop one of the biggest and perhaps least known fortunes on Wall Street. Credit Suisse Washington D.C., April 27, 2022 . Archegos stock manipulation scheme was historic, U.S. attorney says. The massive selloff was largely felt on Friday last week when shares of media conglomerates and investment banks dropped off, sending shockwaves through the market and sparking fears of wider spread contagion. The founder grew his family office's $200 million investment to $10 billion, but he did not need to register as an investment advisor since he was only managing his own wealth. Bill Hwang, the investment firms owner, and his former chief financial officer had deliberately misled their banks, prosecutors said, so they could borrow money and place enormous bets on a handful of stocks through sophisticated securities. In March of 2021, declines in the prices of Archegos major holdings prompted its lenders to demand more collateral. According to a 2012 story in the Wall Street Journal, the company was sentenced to probation and ordered to forfeit more than $16 million. and Discovery Inc. Morgan Stanley and Goldman Sachs, for instance, are listed as the largest holders of GSX Techedu, a Chinese online tutoring company that's been repeatedly targeted by short sellers. However, Bloomberg reports that only last week Archegoss net capital which was essentially Hwangs fortune had reached a whopping $10 billion. The family company Archegos Capital Management had defaulted loans Hwang had used to build his . Until recently, Bill Hwang sat atop one of the biggest and perhaps least known fortunes on Wall Street. In Hong Kong, he was also banned from trading securities in 2014 for four years. The lies fed the inflation, and the inflation fed more lies. --With assistance fromSridhar Natarajan. The Archegos Capital founder is currently in the spotlight after his company suffered a heavy loss this week. ViacomCBS executives hadnt known of Mr. Hwangs enormous influence on the companys share price, nor that he had canceled plans to invest in the share offering, until after it was completed, two people close to ViacomCBS said. Hwang went to work for Robertson's Tiger Management. Bill Hwang, the man behind Archegos Capital Management, also suffered a staggering $8 billion dollars in 10 days one of the fastest losses of that size traders have ever seen, The Wall Street Journal reported. Archegos Latest: Bill Hwang Get $100 Million Bail, Pleads Not guilty - Bloomberg . But hes doing it in a very unassuming, humble, non-boastful way.. Bill Hwang built a fortune of around $20 billion but lost it in a matter of days, Bloomberg reported. The charging documents, the press conference and the court appearance still left many questions unanswered, including the big one: How exactly did Hwang think this would all end? The SEC also charged Archegos's Chief . That same year, Tiger Asia pleaded guilty to federal insider-trading charges in the same investigation and returned money to its investors. A Bloomberg opinion piece suggests that the recent implosion of Archegos Capital Management could have been avoided. And we allege that they told those lies for a reason: so that the banks would have no idea that Archegos was really up to a big market-manipulation scheme.. Hwangs current net worth remains unconfirmed. Archegos was trading stocks on two continents, and banks could charge sizable fees on the trades they helped arrange. Regulators formally lifted the restriction in 2020. Lawyers for both men entered not guilty pleas during their arraignment. Ashlee Vance explores innovations in new tech, software, engineering, and science in places outside of Silicon Valley. A key reason that Hwang's wealth collapsed so spectacularly is that he used large amounts of leverage. Until a few days ago, Mr. Hwang and his lawyers had thought they would be able to persuade federal authorities not to file criminal charges. Bill Hwang, the investment firm's owner, and his former chief financial officer had deliberately misled their banks, prosecutors said, so they could borrow money and place enormous bets on a. Hwang, the billionaire behind Archegos Capital Management, is facing 380 years in prison. Hwang settled that case without admitting or denying wrongdoing, and Tiger Asia pleaded guilty to a Justice Department charge of wire fraud. Who is Patrick Wojahn? Before he lost it allall $20 billionBill Hwang was the greatest trader youd never heard of. Archegos owned a 20% stake in Texas Capital Bancshares Inc., and their stock rose 93 percent before plummeting following Archego's demise. Others are calling for more transparency in the market for the kind of derivatives sold to Archegos. [15] Archegos had a 20% share of Texas Capital Bancshares Inc., and their share increased 93% but plunged after Archegos' collapse. The trades were obfuscated by the loose regulations governing so-called family offices like Archegos, which wealthy individuals use to manage their investments. At Peregrine, he met Julian Robertson as one of his clients. +3.91%. Billionaire Mike Novogratz seems to be especially curious about Archegos boss Bill Hwang's personal wealth. 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. Hwang also set up the Grace and Mercy Foundation, which swelled to hundreds of millions of dollars in assets and backed largely Christian organizations. 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That approach makes sense for small family offices, but if they swell to the size of a hedge fund whale they can still pose risks, this time to outsiders in the broader market. In Japan, Nomura Holdings Inc. took a $2.9 billion hit. This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Archegos established trading partnerships with firms including Nomura Holdings Inc., Morgan Stanley, Deutsche Bank AG and Credit Suisse Group AG. He was also banned from trading securities in . Rather, it is an investment vehicle used by centimillionaires and billionaires to grow their wealth, reduce their taxes and plan their estates," Berkovitz said. "Four Charged in Connection with Multibillion-Dollar Collapse of Archegos Capital Management", "Seduced by Archegos' growth, Nomura took a chance on Hwang comeback", "Archegos Founder Bill Hwang and CFO Charged With Securities Fraud", "God and man collide in rise and fall of Bill Hwang's life on Wall Street", "The man at the heart of the Archegos fiasco is a 'Tiger cub' and devout Christian who pleaded guilty to insider trading. Making such deals across multiple lenders kept them unaware of the size of Mr. Hwangs wagers. The lies fed the inflation, and the inflation led to more lies.. Yet as the federal government tells it, something fundamentally changed in Hwangs investment process as the Covid-19 pandemic hit. as well as other partner offers and accept our, billionaire hedge fund pioneer Julian Robertson, Registration on or use of this site constitutes acceptance of our. Until the end, Hwang -- a devout Christian who, despite his wealth, lived in modest surroundings in suburban New Jersey -- believed he could single-handedly bend world markets to his will, prosecutors contend. In 2018, the foundation had more than US$500 million in assets. Carnegie Mellon University, where Mr. Hwang received his masters degree after studying economics at U.C.L.A. .. Advertisement .. One Of World's Greatest Hidden Fortunes Crashed In Days. He set up Archegos -- a Greek word often translated as author or captain, and often considered a reference to Jesus -- to manage his own personal fortune. Sensing imminent failure, Goldman began selling Archegoss assets the next morning, followed by Morgan Stanley, to recoup their money. Reuters/Rick Wilking. Bill Hwang's net worth after collapse After suffering a $5.5 billion loss, Credit Suisse decided to exit the prime brokerage business. Then the price dropped. [8], He is the co-founder of the Grace and Mercy Foundation, a charitable organization. An indictment was unsealed today charging Sung Kook (Bill) Hwang, the founder and head of a private investment firm known as Archegos, and Patrick Halligan, Archegos's Chief Financial Officer, with racketeering conspiracy, securities fraud, and wire fraud offenses in connection with interrelated schemes to unlawfully manipulate the prices of publicly traded securities in Archegos's . Even on Wall Street, few ever noticed him -- until suddenly, everyone did. We allege that these defendants and their co-conspirators lied to banks to obtain billions of dollars that they then used to inflate the stock price of a number of publicly-traded companies, U.S. Attorney Damian Williams said in a statement. That changed in late March, after shares of ViacomCBS fell precipitously and the lenders demanded their money. Morgan Stanley was running the deal. The meltdown of Mr. Hwangs firm had ripple effects. Tiger Asia Management became one of the biggest Asia-focused hedge funds, running more than $5 billion at its peak. Late Monday in New York, Archegos broke days of silence on the episode. The people valued the position at $20 billion. It didnt work, and Archegoss leadership team prepared for margin calls the next day. Bill Hwang is a Korean-born New York-based investor on Wall Street. The total size of Archegos market positions, including investments made with money borrowed from the counterparties, grew from approximately $10 billion to more than $160 billion over the course of just one year, the indictment declares. GOTU, Its all the more impressive considering Hwang was largely unknown before Archegoss spectacular collapse, save for a small group of managers affiliated with hedge fund legend Julian Robertson. Bill Hwang, who ran the fund that below up on Friday, also co-founded the Grace and Mercy Foundation. It lost more than $5 billion, and the trading debacle led to a number of top-level management changes at the bank. Manhattan federal prosecutors arrested and criminally charged the owner, Bill Hwang, and his former top lieutenant in one of the highest-profile Wall Street prosecutions in years. He went on to receiving an MBA from Carnegie Mellon University. Archegos . Archegos Capital Management's net capital - essentially Bill Hwang's wealth - had reached north of US$10 billion. A former protege of Tiger Management founder Julian Robertson, tiger cub Hwang went out on his own and established Tiger Asia Management in 2001, with a boost of funding from his mentor Robertson. Like Hwang, Wood is known to hold Bible study meetings and figures into what some refer to as the faith in finance movement. I couldnt go to school that much, to be honest.. "On more than one occasion, Tiger Asia was entrusted with confidential, nonpublic information about companies only to turn around and violate that trust by illegally trading millions of shares of the company's stock for huge profits," U.S. attorney Paul Fishman told the Wall Street Journal in 2012. was facing major negative press in 2020 following a report by famed short selling firm Muddy Waters Research that alleged the education tech companys financial results were fraudulent. Reporters from Bloomberg's Washington, D.C. bureau are prominently featured as they offer analysis of policy and legal issues. Two of his bank lenders have revealed billions of dollars in losses. It used to be $10 billion, but . April 3, 2021. Wealth Management is part of the Informa Connect Division of Informa PLC. But among the most enduring elements of its collapse is the way it inspired federal regulators to dig into the way Wall Street went about unwinding Hwangs massive portfolio. Hwang and his employees allegedly lied to banks about the nature of its positions in order to convince them to extend him the credit necessary to purchase derivatives that were economically equivalent to owning the underlying securities. Hubris and greed, prosecutors say, fueled a brazen scheme to deceive major banks and manipulate markets. Bill Hwang, real name Sung Kook Hwang, was spotted outside his Tenafly, New Jersey home Tuesday amid the fallout from the collapse of Archegos Capital Management last week. Without the need to market his fund to external investors, Hwang's strategies and performance remained secret from the outside world. Bill Hwang, the Wall Street investor who 'lost' US$20 billion in days, is a devout Christian who gave away millions to good causes | South China Morning Post Heard about the Wall Street. But it all came crashing down at the end of March when some of Hwang's highly leveraged bets started to go wrong and his banks sold huge chunks of his investments. Whats more, he was able to further increase his influence by coordinating trades with a person identified as Adviser-1, who Bloomberg News reported is Tao Li, the head of Teng Yue Partners, a New York-based hedge fund that oversaw $4 billion as of last year. [17] Lawyers for Hwang and Halligan stated that they were innocent of the charges in the indictment. Copyright 2023 Market Realist. The full picture of his holdings is still emerging, and it's not clear what positions derailed, or what hedges he had set up. The show examines all aspects of the legal profession, from intellectual property to criminal law, from bankruptcy to securities law, drawing on the deep research tools of BloombergLaw.com and BloombergBNA.com. Halligan was released on a $1 million bond. Offers may be subject to change without notice. Bill Hwang is an American New York-based investor on Wall Street. In 2012, after years of investigations, the U.S. Securities and Exchange Commission accused Tiger Asia of insider trading and manipulation of Chinese bank stocks. 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. Bill Hwang's strategies and performance remained secret from the outside world. As a subscriber, you have 10 gift articles to give each month. The foundation has donated tens of millions of dollars to Christian organizations. GSX Techedu He also seeded funds run by Cathie Woods Ark Investment Management. Before the losses, Hwang was believed to be worth $10-15 billion with his investments leveraged 5:1. A year after the collapse of Archegos sent shock waves through global finance, Hwang was arrested Wednesday morning and, for the first time, federal prosecutors offered an official account of what really happened at the secretive family office. But things came crashing down on the multi-billion hedge fund in 2012 after the Securities and Exchange Commission charged the fund and Hwang with insider trading and manipulation of Chinese stocks. Mr. Hwang, who appeared in court with chin-length salt-and-pepper hair swept behind his ears, was released on a $100 million bond, secured by $5 million in cash and two properties. +1.07% filed its own civil complaint on Wednesday against Mr. Hwang, Mr. Halligan and two former traders at Archegos. It is a sign of me buying, followed by a laughing emoji. Archegos likely couldnt make the margin calls -- setting off panic inside the firm and at the banks that had lent Hwang billions. which lost roughly $5.5 billion following the Archegos default, conducted an independent external investigation into the matter. The Commodity Futures Trading Commission also filed a civil complaint over the matter. The cascade of trading losses has reverberated from New York to Zurich to Tokyo and beyond, and leaves myriad unanswered questions, including the big one: How could someone take such big risks, facilitated by so many banks, under the noses of regulators the world over? Besides the $10 million in personal financing through family and friends, the new fund got backing from banks such as Goldman Sachs Group Inc, Morgan Stanley, Nomura Holdings Inc. and Credit Suisse Group AG. "The collapse of Archegos Capital Management and the billions of dollars in losses to investors and other market participants is a vivid demonstration of the havoc that errant large investment vehicles called 'family offices' can wreak on our financial markets," Dan Berkovitz, a Democratic commissioner on the Commodity Futures Trading Commission, said in a statement, Thursday. Mr. Hwang knew that Archegos could affect markets simply through the exercise of its buying power, the complaint said. Goldman finished unwinding its position but did not record a loss, a person familiar with the matter said. Biden had small cancerous lesion removed, White House doctor says, Ron DeSantis skips CPAC, says Republicans act like potted plants when facing woke ideology. One reason is that Hwang never filed a 13F report of his holdings, which every investment manager holding more than $100 million in U.S. equities must fill out at the end of each quarter. Hwang directed the traders to use the bullets, or trading capacity, at opportune moments that would create upward pressure on the stock price. In March 2021, the losses at Archegos Capital Management triggered the default and liquidation of positions approaching $30 billion in value, leading to substantial losses to Nomura and Credit Suisse, as well as Goldman Sachs and Morgan Stanley[10][14] The firm had large positions in ViacomCBS, Baidu, Vipshop, Farfetch, and others. Lawrence Lustberg, a lawyer for Mr. Hwang, said that the indictment has absolutely no factual or legal basis and that his client was entirely innocent of any wrongdoing. Mr. Lustberg called the allegations against his client overblown., Mary Mulligan, a lawyer for Mr. Halligan, said her client is innocent and will be exonerated.. Bill Hwang has found himself at the centre of a huge margin call that affected the shares of major banking investment companies. Mr. Hwang has laid low, issuing only a short statement calling this a challenging time for Archegos. [19] He has a daughter, Joanne, who attended Fordham University in New York City. [17] Hwang, the enigmatic billionaire behind Archegos, had amassed one of the worlds great fortunes in virtual secrecy, and that trove -- a staggering $160 billion position in stocks -- was unraveling everywhere, all at once. The document maintains that the increase in the value of the Archegos holdings was largely the result of Hwangs manipulative trading and deceptive conduct that caused others to trade.. https://www.nytimes.com/2022/04/27/business/archegos-bill-hwang-patrick-halligan.html. His holdings were once in large and highly liquid stocks. as well as other partner offers and accept our, Goldman Sachs handpicks 40 stocks that will enjoy bigger earnings growth than Wall Street expects in 2021, A 29-year-old self-made billionaire breaks down how he achieved daily returns of 10% on million-dollar crypto trades, and shares how to find the best opportunities, Registration on or use of this site constitutes acceptance of our. By Kate Kelly,Matthew Goldstein,Matt Phillips and Andrew Ross Sorkin. Before this, Hwang set up Tiger Asia Management LLC in 2001 with the support of investor Julian Robertson, the founder of Tiger Management. That is, Archegos borrowed lots of money to fund his investments, meaning it faced large losses when they went bad. The indictment names two former Archegos employees, Scott Becker and William Tomita, as part of the scheme. [18], Hwang is a Christian. In March 2021, two names - Bill Hwang and Archegos Capital Management - hit the headlines of leading media outlets. Bill Hwang built up a fortune of around $20 billion through savvy investments, but then lost it all in 2 days in March as his Archegos investment fund imploded after some of his bets went awry, a report has said.