Archegos CFO, From Syosset, Indicted On 'Historic' Stock Fraud Charges

SYOSSET, NY — A Syosset man was indicted on Wednesday for racketeering fraud for a market manipulation scheme the Department of Justice says was responsible for the multibillion-dollar collapse of a private investment firm. Patrick Halligan was the Chief Financial Officer of Archegos Capital Management, which went under in 2021, leaving major banks with $10 billion in debt and shocking Wall Street.

Halligan was arrested at home and charged along with Sung Kook (Bill) Hwang, the founder and head of Archegos, who prosecutors say deliberately obscured the inner workings of the firm and "unlawfully manipulated the prices of publicly traded securities...to defraud many leading global investment banks and brokerages," according to the indictment.

“This scheme was historic in scope,” Damian Williams, U.S. attorney for the Southern District of New York, said.

“The lies fed the inflation, and the inflation fed more lies. Round and round it went. But last year, the music stopped.”

Hwang and the other co-conspirators used so-called "swaps" with banks "to artificially pump up stock prices," the federal indictment explains.

"Hwang, Halligan and their co-conspirators lied to banks and used a series of manipulative trading techniques to keep those prices high and prevent them from falling. This led to inflation of these stock prices. In one year, Hwang turned a $1.5 billion portfolio and fraudulently pumped it up into a $35 billion portfolio."

In March 2021 the scheme faltered, and $100 billion in shareholder value disappeared overnight.

Because Archegos functioned as a family office, it was exempt from regulatory oversight that allowed the fraud to continue unnoticed.

The firm was eventually investigated by the Department of Justice, the Securities and Exchange Commission and the Commodity Futures Trading Commission, according to the New York Times.

Halligan, 45, pleaded not guilty and was freed on $1 million in bail. Hwang, of New Jersey, was also released on $100 million dollar bail.

The two men are also facing civil charges along with the criminal racketeering conspiracy, securities fraud, and wire fraud offenses.