'Wall Street Margin Call Crisis' Korean-American Investor Bill Hwang, Criminal Trial Begins on 8th

The criminal trial of Bill Hwang (Korean name Hwang Seong-guk), a Korean-American investor who triggered the 2021 Wall Street derivatives margin call crisis, begins on the 8th (local time).

[Image source=Reuters Yonhap News]

According to major foreign media, the U.S. District Court for the Southern District of New York will start jury selection on the 8th and proceed with the trial schedule for Hwang's fraud charges.

The U.S. Attorney's Office for the Southern District of New York indicted Hwang, founder of Archegos Capital, in April 2022 on charges including fraud. Hwang is accused of deceiving financial firms to borrow large sums and then manipulating stock prices by investing in derivatives on stocks they held.

Hwang's personal investment firm, Archegos Capital, had previously entered into total return swap (TRS) and contract for difference (CFD) agreements with investment banks (IBs), investing approximately $50 billion?more than five times its assets?in stocks. However, when the stock prices of the invested securities fell, margin calls requiring additional collateral payments occurred, and losses spread as investment bank Goldman Sachs sold the collateral stocks through block trades.

At that time, losses suffered by investment banks such as Credit Suisse and Nomura due to the Archegos margin call crisis were reported to reach $10 billion. The indictment submitted in 2022 also stated that "the corporate value of 12 companies worth over $100 billion disappeared within days."

Joshua Naftalis, the former prosecutor who indicted Hwang, said that if convicted of fraud and other charges, a life sentence is possible. Major foreign media reported that two of Hwang's former colleagues have pleaded guilty, and another will stand trial alongside him.

However, there is also widespread analysis that proving the charges will not be easy. Hwang's side claims innocence, arguing that it was a common leveraged investment technique.

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