The Securities and Exchange Commission (SEC) updated its lawsuit against Archegos Capital Management LP, Sung Kook (Bill) Hwang, Patrick Halligan, William Tomita and Scott Becker.
The regulator informed the Southern District Court of New York that the suspension of the case should continue.
Due to a lack of federal government funding, as of October 1, 2025, most SEC staff have been furloughed (with limited exception) and prohibited from working.
The SEC’s counsel assigned to this matter has been terminated and, therefore, has been unavailable to work on it, and will not be able to begin meaningful settlement negotiations during the pendency of the appropriations statute of limitations.
Given these circumstances, the parties asked the Court to maintain the current stay and set a deadline for a further joint status report for 60 days after the restoration of federal credits.
On April 27, 2022, the United States District Court unsealed the indictment charging Hwang and Halligan with a total of eleven counts. Huang and Halligan were each charged with one count of racketeering conspiracy, securities fraud and wire fraud, respectively. Hwang was also charged with one additional count of securities fraud and seven counts of market manipulation.
Also on April 27, 2022, the SEC filed a complaint against Hwang, Halligan and Archegos Capital Management LP, alleging violations of securities laws related to the same schemes. On the same day, the Commodity Trading Commission (CFTC) filed a complaint against Halligan and Archegos Capital Management LP alleging violations of commodity laws related to the same schemes described in the Criminal Indictment.
On August 26, 2022, the SEC amended the SEC’s original complaint to add further details, including excerpts from the transcript of the criminal proceeding involving one of the government’s cooperating witnesses.
As alleged in the indictment, the SEC Amended Complaint and the CFTC Complaint, Hwang and Halligan participated in corrupting the operations and activities of the family office known as Archegos Capital Management and its related corporate entities and employees. Hwang, Halligan and their associates used Archegos, a family office that invested Hwang’s personal fortune, as a tool for market manipulation and fraud. Hwang, the founder and co-CEO of Archegos Capital Management (ACM), and Halligan, the Chief Financial Officer of ACM, along with their co-conspirators, used Archegos to commit two interrelated criminal schemes.
First, Hwang designed and conspired to defraud market participants by manipulating, controlling and artificially influencing the market for certain securities in Archegos’ portfolio. In particular, to drive up the prices of these securities, Hwang amassed extraordinary exposure to these stocks through billion-dollar purchases made with money borrowed from many leading global investment banks and brokerage firms based on lies and misrepresentations.
The increased demand for these shares and the decreasing supply of freely tradable shares resulted in a significant artificial appreciation of the price of each share. This manipulation strategy leveraged Archegos Counterparties’ margin frames by recycling “excess” margin into further purchases. In turn, the strategy created additional price inflation and thus even more “excess” margin.
Hwang further used his market power to “support” or “defend” the stock prices underlying Archegos’ positions through a variety of manipulative short-term trading techniques, including engaging in trades at specific times or trading in specific dollar amounts or volumes of shares, in ways designed and intended to artificially affect stock prices.
In doing so, Hwang led market participants to believe that the prices of these stocks were a product of the natural forces of supply and demand when, in fact, they were the artificial product of Hwang’s trading manipulation and misleading behavior that induced others to trade.
Second, with Hwang’s knowledge and approval, Halligan and others repeatedly made materially false and misleading statements about Archegos’ securities portfolio to the Counterparties. Specifically, the conspirators repeatedly made materially false and misleading statements to the Counterparties about Archegos’ portfolio and positions in order to obtain billions of dollars of credit and trading capacity for Hwang.
These lies and misrepresentations masked the real risks associated with the Archegos portfolio and were integral to the conspiracy’s success. The false and misleading statements were designed to fraudulently induce Counterparties to trade with and extend credit to Archegos, enabling and facilitating the market manipulation scheme and to conceal the real risk of trading with Archegos.
The criminal conduct of the defendants and others turned Hwang and Archegos into significant economic forces in the United States securities markets. Between or around March 2020 and the week of March 22, 2021, Archegos’ capital — essentially Hwang’s personal fortune — grew from about $1.5 billion to more than $35 billion.
Archegos’ positions, including indirectly through positions in derivative securities, were larger than any of the disclosed shareholders of many public companies. The total size of Archegos’ market positions, including investments made with money borrowed from Counterparties, increased from approximately $10 billion to more than $160 billion.
These manipulative and fraudulent schemes left the Archegos portfolio extremely vulnerable to price fluctuations in a handful of stocks. At the end of March 2021, this risk materialized: falling prices of some stocks in the Archegos portfolio led to margin calls. That is, the Counterparties asked Archegos to provide more cash to support its transactions.
Because selling Archegos positions to raise cash could further deflate the artificial prices of those securities, leading to a downward spiral, Hwang instead led Archegos traders to engage in a desperate buying spree in an attempt to reverse the decline in the share prices underlying Archegos’ core positions. Acting under Hwang’s direction, the traders used Archegos’ remaining cash and credit, including funds borrowed based on misrepresentations and lies to Counterparties, to pay for billions of dollars in trades in just a few days.
The buying spree failed and Archegos was unable to pay the additional cash requested by the Counterparties. As a result, Counterparties sold Archegos positions and prices — which had been artificially supported by Hwang-directed trades — collapsed. More than $100 billion in apparent market value for nearly a dozen companies disappeared in a matter of days.
Ultimately, the market manipulation and fraud schemes, and the billions of dollars in losses they caused, victimized a number of market participants, including (a) banks and leading brokers who engaged in loans and securities transactions with Archegos based on lies and deceit; b) ordinary investors who bought and sold the relevant securities at artificial prices; and (c) issuers of securities who made business decisions based on their artificial share prices.
The schemes also caused millions of dollars in losses to innocent Archegos employees who were required to distribute to Archegos a substantial amount of their pay as deferral compensation.