Bill Hwang and his Archegos Capital Management family office lost a bid to dismiss civil market manipulation claims filed by the US Securities and Exchange Commission.
(Bloomberg) — Bill Hwang and his Archegos Capital Management family office lost a bid to dismiss civil market manipulation claims filed by the US Securities and Exchange Commission.
US District Judge J. Paul Oetken in New York on Tuesday declined to dismiss the case against Hwang and Archegos, but narrowed the SEC’s claims against former Archegos Chief Financial Officer Patrick Halligan.
The SEC claims the defendants illegally used massive swaps, combined with share purchases, to manipulate the value of its holdings and that they misled counterparties about Archegos’s portfolio. In response, the company argued that the SEC failed to claim facts that would constitute market manipulation and that the agency lacks jurisdiction to sue over the alleged misrepresentations.
Hwang and Halligan face related criminal charges over the collapse of Archegos, which at one point held market positions valued at $160 billion, according to prosecutors. The implosion cost banks $10 billion and contributed to a downward spiral at Credit Suisse Group AG. Hwang has pleaded not guilty to charges of racketeering conspiracy, fraud and market manipulation.
Oetken dismissed some claims against Halligan, ruling that the SEC failed to demonstrate that he acted intentionally in connection with the alleged misrepresentations and that he was not responsible for actions taken by other Archegos employees. Other claims against Halligan were allowed to proceed.
The judge also threw out a related suit filed by the Commodity Futures Trading Commission against Archegos, saying the agency failed to come up with a plausible theory of liability for its claims.
“We are pleased that the court rejected the CFTC’s efforts to inappropriately expand its jurisdiction, and are gratified that the Court agrees that the SEC has overreached and brought baseless claims against Mr. Halligan,” his lawyers, Mary Mulligan and Tim Haggerty, said in a statement. “We will continue to fight the deeply flawed allegations against our client.”
Oetken also granted a request by US prosecutors to delay pretrial evidence gathering to avoid interference with the criminal case.
Lawyers for Archegos and Hwang didn’t immediately respond to emails seeking comment.
The judge did throw out a related suit filed by the Commodity Futures Trading Commission against Archegos, saying the agency failed to come up with a plausible theory of liability for its claims.
The case is Securities and Exchange Commission v. Hwang, 22-cv-03402, US District Court, Southern District of New York (Manhattan).
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