Former Archegos Capital Employees Awarded $33 Million in Compensation
A federal judge ruled that former Archegos Capital employees are owed $33 million in compensation for losses suffered when the firm collapsed. The employees had invested deferred compensation in Archegos, with some feeling coerced by founder Bill Hwang.
Federal Judge Rules for Former Archegos Employees
A federal judge has ruled that a group of former Archegos Capital Management employees are owed $33 million in compensation for losses suffered when the firm collapsed. The ruling puts the 39 ex-Archegos staffers first in line for compensation from founder Bill Hwang and former CFO Patrick Halligan, who were both convicted of fraud last year.
Significance of the Ruling
The ruling is significant as Hwang and Halligan owe former Archegos trading partners billions of dollars. Hwang, once worth more than $30 billion, lost most of his fortune when Archegos imploded in 2021. The ex-employees had invested deferred compensation in Archegos, with some claiming they felt coerced by Hwang.
Controversy and Legal Actions
There has been controversy over whether some employees deserved to recover their losses. Former CEO Andy Mills abandoned efforts to recoup losses after prosecutors claimed he was a 'knowing participant' in the fraud. However, Judge Hellerstein found that Mills was not a victim and had no role in dealing with the defrauded banks.
Hwang's Sentence and Collapse of Archegos
Hwang was sentenced to 18 years in prison for misleading banks into providing Archegos with trading capacity that inflated the value of his portfolio until it burst in March 2021. Archegos' collapse contributed to the demise of major financial institutions like Credit Suisse Group AG and caused significant losses at other banks.
Lawyers for Hwang and Halligan did not immediately respond to requests for comment on the ruling. Both are free on bail pending appeal.
The case is US v. Hwang, 22-cr-00240, US District Court, Southern District of New York (Manhattan).