US Prosecutors Launch Investigation into Bill Hwang, Korean-American Manager Behind Archegos Scandal

[Photo by AP Yonhap News]

[Asia Economy Reporter Byunghee Park] The U.S. Department of Justice has launched an investigation into Korean-American investor Bill Hwang (Korean name Hwang Seong-guk) in connection with the March hedge fund Arkeogos Capital Management incident, Bloomberg News reported on the 26th (local time).

According to sources, the U.S. Manhattan Federal Prosecutor's Office requested related information from some banks that dealt with Hwang's personal investment firm, Arkeogos Capital Management. Bloomberg reported that it is unclear what specific charges the prosecutors are pursuing or which organizations are under investigation. The news agency added that it inquired with both the prosecutors and Arkeogos representatives about the investigation but received no response.

In March, Arkeogos suffered significant losses after engaging in large-scale leveraged transactions through investment banks using derivatives such as total return swaps (TRS). They faced margin calls but failed to meet the additional collateral requirements. Ultimately, the investment banks associated with Arkeogos sold off a large volume of collateralized stocks to minimize losses, causing major turmoil in the New York stock market.

According to reports, some banks like Goldman Sachs responded quickly and avoided losses, while Credit Suisse and Nomura Securities recorded losses amounting to billions of dollars. Credit Suisse suffered the largest loss among banks involved in the Arkeogos incident, totaling $5.5 billion (approximately 6.14 trillion KRW), and Nomura Securities also incurred a loss of $2.85 billion. Swiss investment bank UBS disclosed in its quarterly report that it incurred a loss of $861 million.

Michael Hsu, Acting Comptroller of the Currency (OCC), pointed out last week that this incident shows Wall Street’s complacency toward potential threats to the economy. Bloomberg cited sources reporting that the U.S. Securities and Exchange Commission (SEC) began a preliminary investigation into Hwang in March and is considering measures to increase transparency in derivatives trading.

This content was produced with the assistance of AI translation services.