by Jody Godoy
April 28 (Reuters) – U.S. businessman Bill Hwang, founder of Archegos Capital Management, was released on bail after pleading not guilty on Wednesday to charges of fraud in connection with his hedge fund’s business , whose bankruptcy cost several major international banks $10 billion.
Archegos, which had $36 billion in assets, collapsed last year when it defaulted on margin calls, rocking Wall Street with massive sales of stakes including ViacomCBS VIAC.O and Discovery DISCA.O.
The fall, on a scale rare for a private investment firm in recent years, resulted in billions of dollars in losses for Credit Suisse CSGN.S, Nomura Holdings 8604.T and other Archegos creditors.
New York prosecutors accuse Bill Hwang of lying to banks in order to increase his firm’s credit lines, before using derivatives traded with them to manipulate underlying stocks and increase his profits.
In a separate civil complaint filed on Wednesday, Wall Street’s “constable”, the Securities and Exchange Commission (SEC), accused the founder of Archegos and the firm of a “daring scheme to manipulate the market”.
Bill Hwang was arrested Wednesday morning, as was Archegos chief financial officer Patrick Halligan. In federal court in Manhattan, he pleaded not guilty to 11 charges against him, including extortion, market manipulation and fraud.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^^^^^^^^^^ EXPLAINER-Why Archegos Capital was in US regulators' blind spot nL3N2WP3OQ EXPLAINER-What charges do Archegos founder and former CFO face?
nL2N2WP2GB
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^^^^^^^^^>
(Reporting Niket Nishant in Bangalore and Jody Godoy in New York, with Megan Davies and Elizabeth Dilts in New York, Chris Prentice in Washington; French version Jean Terzian, editing by Bertrand Boucey)