© Stocksak. FILE PHOTO. Sung Kook Hwang (Bill) Hwang is the founder and head a private investment firm called Archegos. He exits the Manhattan federal Courthouse in New York City on April 27, 2022. REUTERS/Shannon
NEW YORK, Stocksak -Bill Hwang (Archegos Capital Management LP) collapsed in March 2021. On Tuesday, he asked a federal judge to dismiss a U.S. Securities and Exchange Commission civil case against him and his private investment company, worth $36 billion.
Hwang and Archegos claimed in court filings that the SEC failed demonstrate how the New York-based company traded deceptively or how swaps trades, they called “lawful,” affected prices.
They claimed that this undermined the regulator’s claim that Archegos had risen ninefold from $4 Billion to $6 Billion in six months using a “brazen market manipulation scheme”.
Hwang stated that “The SEC declares illegal a number of practices which have long been accepted as completely legitimate and commonplace on the market.”
“No trader could know that these kinds of actions might someday be deemed illegal, simply because M. Hwang’s trading failed in the short-term, costing him but no other investors billions of dollars in lost,” he stated. Archegos also said Hwang’s transactions were no different than transactions by “an enthusiastic investor with sufficient means to pursue an investment opportunity.”
Archegos claimed that the Supreme Court precedent stopped the SEC pursuing claims that they violated securities laws by lying about its liquidity, portfolio concentration, and borrowing money for its trades.
A spokesperson for the SEC declined to comment.
Archegos collapsed after it failed to meet margin demands following being caught short on trades using so-called total returns swaps.
Its demise was a disaster for banks such as Credit Suisse Group AG. Nomura Holdings (NYSE:) Inc with losses of about $10 billion
Patrick Halligan, former Archegos Chief Financial Officer, and Hwang pleaded guilty to fraud and racketeering conspiracy charges by the Department of Justice. Their criminal trials are scheduled for October 10, 2023.
Scott Becker, Archegos former chief risk officer and William Tomita, former head trader, pleaded guilty and agreed to cooperate in the criminal case. They and Halligan are also accused in the SEC case.
SEC v Hwang, U.S. District Court Southern District of New York No. 22-03402.