In a significant blow to the financial industry, a federal jury has found Bill Hwang, the founder of Archegos Capital Management, guilty of fraud and racketeering for his role in a scheme involving ViacomCBS stock. The verdict marks a major legal victory for the Securities and Exchange Commission (SEC) and the US Department of Justice, which had accused Hwang of defrauding investors and engaging in a fraudulent scheme to conceal his firm’s massive losses in ViacomCBS stock.

Hwang, 59, was accused of orchestrating a scheme to manipulate the prices of ViacomCBS stock, artificially inflating its value and luring investors into buying more stock, which ultimately led to significant losses. The scheme, which took place from 2015 to 2018, resulted in Archegos Capital Management losing hundreds of millions of dollars, as well as the reputation of its founder.

The SEC and the Department of Justice launched an investigation into Archegos Capital Management in 2019, after the company’s financial woes began to unravel. The investigation revealed that Hwang had been using a complex web of shell companies and other entities to conceal his firm’s significant exposure to ViacomCBS stock, which had become a major risk to the company’s financial stability.

The trial, which began in October 2020, was marked by dramatic testimony from former employees and investors, who described the chaotic atmosphere at Archegos Capital Management, where Hwang was known for his aggressive trading tactics and bellicose management style. The prosecution presented evidence that Hwang had used shell companies to hide his firm’s losses, and that he had made false statements to investors and regulators about the firm’s financial health.

In his defense, Hwang’s legal team argued that the prosecution’s case was built on “speculative and circumstantial evidence,” and that the SEC and the Department of Justice lacked witness testimony to support their allegations. However, the jury saw through the defense’s arguments, delivering a guilty verdict on all 15 counts of fraud and racketeering.

The guilty verdict is a major blow to Hwang, who is expected to face significant legal and financial penalties. The SEC has also sought to bar Hwang from the securities industry, and a judge is likely to impose a significant fine and other restrictions on his future activities.

The case is also significant for its broader implications for the financial industry, as it highlights the need for greater transparency and accountability in the way that investment firms manage their risks and disclose their financial information to regulators and investors. As the investigation into Archegos Capital Management continues, it is likely that more firms will be subject to scrutiny and penalties for their actions.

In a statement, the SEC’s Director of Enforcement, said, “Today’s verdict is a testament to the importance of our efforts to protect investors and maintain the integrity of the securities markets. We will continue to work tirelessly to hold accountable those who engage in fraudulent activities, and to ensure that the markets remain fair and trustworthy for all investors.”

The guilty verdict is a major victory for the SEC and the Department of Justice, and serves as a reminder of the importance of transparency and accountability in the financial industry.