Bill Hwang’s Legal Battle Over $10 Billion Restitution Continues

Lawyers representing Bill Hwang, the founder of Archegos Capital Management, are contesting a U.S. federal court’s potential order for restitution to major Wall Street banks. These banks had lent Hwang money, allegedly under false pretenses. According to Jeenah Moon from Bloomberg/Getty Images, the once prominent financier is purportedly unable to repay the nearly $10 billion requested by prosecutors to compensate the financial institutions that suffered massive losses.

Bill Hwang, a former protege of the hedge fund pioneer Tiger Management, has seen his estimated wealth drastically fall from immense riches to merely $55.3 million at best. Legal representatives for Hwang argue that imposing such a large restitution amount is without merit and unjustified, as stated in a court filing to the U.S. District Court for the Southern District of New York.

Key plaintiffs in this legal saga include Credit Suisse and Nomura, two financial powerhouses seeking most of the $9.86 billion aimed at covering losses from Hwang’s high-risk trading strategies. Prime brokerage desks across Wall Street, which are specialized in servicing high-flying hedge funds and family offices like Archegos, were left heavily exposed following Hwang’s investment maneuvers during the pandemic era.

Hwang’s investment strategy, which substantially involved media stocks at a time when their values soared because of the COVID-19 lockdown, backfired. These moves inadvertently prompted financial instability as the media entity capitalized on its bolstered share price to fund emerging content ventures.

The defense contends that while Hwang played a role in the resulting financial turmoil, isolating his specific liabilities from those of others involved, such as former chief risk officer Scott Becker, is particularly difficult. Becker himself admitted to deceitful practices that misled the lenders independently.

Hwang’s lawyers posit that the onus of the financial fiasco lies partly with the banks, who should take responsibility for their own decision-making processes regarding risk management and investment liquidation strategies.

Furthermore, they suggest that if the restitution is to be pursued, financial institutions should potentially direct their claims towards the U.S. government. This is because the state is seeking to forfeit $12.4 billion as a criminal penalty stemming from what they claim were ill-acquired profits from market manipulation by Archegos.

Hwang’s legal representatives argue that his own financial gains were consistently reinvested rather than personally amassed, a stance they maintain to counter the government’s claim. They assert that the state does not fulfill the legal requisites to justify the forfeiture of such vast assets.

Awaiting sentencing, Hwang could face significant prison time, with U.S. Attorney Damian Williams advocating for the maximum penalty of 21 years following Hwang’s conviction on multiple fraud charges by a jury in Manhattan. Williams’ office has yet to comment further on the matter when approached by Fortune.