Archegos Founder Seeks to Serve Part of Sentence Under House Arrest

Bill Hwang, the founder of Archegos Capital Management, is preparing to appeal for a reduction in his 18-year prison sentence. He requests that one-third of his sentence be served under house arrest. The hearing will take place on Thursday in New York. Hwang's attorney, Barry Berke, will ask U.S. District Judge Alvin Hellerstein to modify his client's sentence to 11.5 years in prison and 6.5 years of house arrest. Berke is expected to argue that this modification is justified due to health concerns and the necessity of serving a longer sentence in a higher-security facility populated by violent offenders.

Hwang's case has captured Wall Street's attention. In July, he was found guilty of devising a scheme to defraud counterparties out of billions of dollars in trading capacity for Archegos. This capacity was used to inflate the value of assets until the firm's collapse in March 2021, which resulted in approximately $10 billion in losses for banks involved in transactions with Archegos.

Judge Hellerstein's readiness to reconsider Hwang's sentence is an unexpected development in the case. The judge may decide during the hearing whether to grant Hwang's request. Federal prosecutors argue that the law does not allow for Hwang’s sentence to be split to allow for 6.5 years of house arrest. They also note the possibility of Hwang being transferred to a minimum-security facility operated by the Bureau of Prisons after about four years, and that he is expected to be released to a halfway house after ten years. They claim that reducing his prison term would be unfair to others convicted of similar crimes.

Prosecutors have stated that allowing a lower sentence for wealthy stock manipulators like Hwang would send the wrong message about circumventing the Bureau of Prisons classification system, which is applied equally to all inmates.

Regardless of the court's decision, Hwang is not expected to enter prison anytime soon. Judge Hellerstein has allowed him to remain free while awaiting an appeal process that could take one year or longer.