Archegos Capital Management’s CFO, Patrick Halligan, has been sentenced to eight years in prison for defrauding banks during the lead-up to the 2021 collapse of Bill Hwang’s $36 billion family office. Halligan’s sentence, handed down on Monday, is significantly shorter than the 18 years received by Hwang in November. Both were convicted last July for misleading banks into granting Archegos billions in trading capacity, but Hwang was also found guilty of market manipulation. US District Judge Alvin Hellerstein noted that Halligan, 48, warranted a lesser sentence than Hwang, whom he described as the “dynamic force of Archegos.” The judge stated that while Halligan understood the consequences of his actions, he did not instigate them.
Federal prosecutors indicated in a pre-sentencing filing that Halligan was “far less culpable than Hwang,” although they acknowledged his critical role in the scheme. They pointed out that while Hwang did not involve Halligan in trading decisions, Hwang’s trading activities could not have occurred without Halligan’s assistance. Testimony from Scott Becker, the former head of risk at Archegos and a cooperating witness, revealed that Halligan trained him to mislead banks about the firm’s financial status to enhance its credit availability. As Archegos faced financial difficulties, Halligan devised talking points to mitigate the banks’ margin calls, instructing Becker and others to assert that the firm was experiencing “a liquidity issue, not a solvency one.”
The collapse of Archegos had significant repercussions, contributing to the downfall of Credit Suisse Group AG and resulting in billions in losses for other banks, including Morgan Stanley, UBS Group AG, and Nomura Holdings. Both prosecutors and Halligan’s defense team recommended an eight-year sentence. Defense attorneys argued against a longer term, emphasizing that the primary victims were large Wall Street banks, contrasting them with vulnerable individuals affected by other financial crimes, such as Bernard Madoff’s Ponzi scheme, for which Madoff received a 150-year sentence.
During the trial, Halligan’s lawyers contended that he had opposed reckless trading practices at Archegos and suggested that Becker’s testimony stemmed from personal animosity. Becker had previously expressed a desire for Halligan to suffer harm, stating in an email in 2018 that he wished Halligan would die in a plane crash, and later suggesting he wanted both Hwang and Halligan to “die painful, slow deaths” from Covid. Becker and former head trader William Tomita were key witnesses for the prosecution, with Tomita detailing how Hwang manipulated markets through aggressive trading strategies aimed at rapidly changing price targets.
