(Dec 20): A federal judge confirmed an 18-year prison sentence for Archegos Capital Management founder Bill Hwang, rejecting arguments that he should be allowed to spend a third of that time in the comfort of his own home.

At a hearing on Thursday in New York, US District Court judge Alvin Hellerstein said Hwang’s request to adjust his sentence to 11 1/2 years in prison, followed by 6 1/2 years in home confinement was ultimately impractical.

Hellerstein sentenced Hwang, 60, on Nov 20 but expressed openness to reconsidering that the following day. Hwang’s lawyer had argued that a change was warranted due to his client’s health and because any longer prison term must be served in a higher-security facility that also holds violent offenders.

But Hellerstein said on Thursday that Hwang “will be treated as I treat all other defendants, many of whom have health problems”.

Hellerstein’s willingness to reconsider Hwang’s sentence was a surprise final twist in a trial that has captivated Wall Street. Hwang was found guilty in July of orchestrating a scheme to defraud bank counterparties into providing Archegos with billions of dollars in trading capacity that it used to inflate the value of its holdings until it imploded in March 2021. The banks lost some US$10 billion (RM45.11 billion) trading with Archegos.

In addition to the prison time, Hellerstein ordered Hwang to pay more than US$9 billion in restitution to seven banks and a group of former Archegos employees who are owed unpaid salary and bonuses. The banks with the biggest losses were Credit Suisse Group AG (US$4.9 billion), Nomura Holdings Inc (US$2.6 billion) and Morgan Stanley (US$740.4 million), according to prosecutors. Five employees claimed losses of US$10 million. 

It’s unlikely that Hwang will ever pay anything like that amount, as his current net worth is only around US$55 million.

Federal prosecutors had argued that dividing Hwang’s sentence so he can to spend 6 1/2 years in home confinement isn’t permitted under the law. They also claim Hwang is already likely to be transferred to a US Bureau of Prisons (BOP) minimum-security “camp” after roughly four years, and will probably be released to a halfway house after 10. Shortening his prison time would be unfair to others convicted of similar crimes, prosecutors said.

“It would send precisely the wrong message if wealthy, Wall-Street stock manipulators like Hwang were permitted a lower sentence in order to avoid the BOP classification system that is applied equally to all inmates,” prosecutors said.

Hwang won’t see the inside of a prison anytime soon. Hellerstein has allowed him to remain free, pending the expected appeal that could take a year or more.

The case is US v Hwang, 22-cr-240, US District Court, Southern District of New York (Manhattan).

Uploaded by Isabelle Francis