He created a $ 10 billion investment firm. In days other than this fell.

Until recently, Bill Hwang sat on the biggest – and perhaps least known – fate of Wall Street. Then his luck ran away.

Mr. Hwang, a 57-year-old veteran investor, manages $ 10 billion through his private investment firm ArcGos Capital Management. He borrowed billions of dollars from Wall Street banks to create huge positions in some American and Chinese stocks. By mid-March, Mr. Hwang was the financial force behind $ 20 billion in shares of Viacombs, effectively making him the single largest institutional shareholder of the media company. But few were aware of their total risk, as the shares were mostly held through complex financial instruments, called derivatives, created by banks.

This changed in late March, with shares of ViacomCBS falling sharply and lenders demanding their money. When the ArchGogs could not pay, they confiscated their assets and sold them, leading to one of the biggest implications of an investment firm in the aftermath of the 2008 financial crisis.

Almost overnight, Mr. Hwang’s personal possessions shrunk. It is a story as old as Wall Street, where the right combination of ambition, lover and time can produce spectacular gains – only to be uprooted in an instant when conditions change.

“This whole case is indicative of the lax regulatory environment over the years,” said Charles Geist, a Wall Street historian. “Archaeologists were able to hide their identities from regulators by leveraging through banks which is the best example of the shadow trade.”

The recession had ripple effects on Mr. Hwang’s firm. Two of his bank lenders have revealed losses of billions of dollars. ViacomCBS halved its share price in a week. The Securities and Exchange Commission opened an initial investigation into Archeogus, two people familiar with the matter said, and market watchers are calling for a tough inspection of Mr. Hwang’s family offices – the wealthy’s investment vehicles that cost him a trillion dollars. Suppose to control. In the property. Others are calling for greater transparency in the market for the kind of derivatives sold to Archives.

Mr. Hwang declined to comment for this article.

He has a proverbial American rags-to-riches story. Born in South Korea, Mr. Hwang moved to Las Vegas in 1982 as a high school student. He spoke very little English, and his first job was as a cook at McDonald’s on the Strip. Within a year, his father, a pastor, had passed away. He and his mother moved to Los Angeles, where he studied economics at the University of California, Los Angeles, but found himself distracted by the excitement of nearby Santa Monica, Hollywood, and Beverly Hills.

“I always blame the people who set UCLA in such a good neighborhood,” he said at a church in Flushing, Queens, those in International Fellowship promised In 2019 speech. “I couldn’t go to school to be honest.”

He graduated – barely, he said – and pursued a master of business administration at Carnegie Mellon University in Pittsburgh. He then worked at a South Korean financial-services firm in New York for nearly six years, eventually a plum job as an investment advisor for Julian Robertson, a respected stock investor whose Tiger Management was founded in 1980 , Was considered a hedges pioneer.

After Mr. Robertson closed the New York Fund to outside investors in 2000, he helped Mr. Hwang’s own hedge fund, Tiger Asia, which focused on Asian stocks and grew quickly, to outside investors. Used to manage $ 3 billion.

Mr. Hwang was known for his great swing. He placed large-focused bets on shares in South Korea, Japan, China and elsewhere, using substantial amounts of borrowed money – or leverage – that could overload his returns or, in turn, his positions. Can be erased.

He was more modest in his personal life. The house and that, his wife Becky, purchased in Tanafali NJ, an upcoming suburb, are valued at $ 3 million by Wall Street standards. A religious man, Mr. Hwang founded Grace & Mercy Foundation, A New York-based nonprofit that sponsors Bible readings and religious book clubs, has raised it from $ 70 million to $ 500 million in assets within a decade. The Foundation has donated millions of dollars to Christian organizations.

“He’s giving ridiculous amounts,” said John Bai as co-founder and managing partner of equity research firm Fundstrat Global Advisors, which has known Mr. Hwang for nearly three decades. “But he is doing it in a very unfounded, polite, non-arrogant way.”

But in his investment approach, he embraced risk and his firm survived the regulators. In 2008, Tiger Asia lost money when investment bank Lehman Brothers filed for bankruptcy at the peak of the financial crisis. The following year, Hong Kong regulators charged the fund Use confidential information It had obtained some Chinese shares to trade.

In 2012, Mr. Hwang reached a civil settlement with US securities regulators in a separate insider trading investigation and was fined $ 44 million. In the same year, Tiger Asia pleaded guilty to federal insider-trading charges in a single investigation and returned the money to its investors. Mr. Hwang was barred from managing public funds for at least five years. Formally regulator Lifted the ban last year.

Shortly after the closure of Tiger Asia, Mr. Hwang opened Archaeogus, named after the Greek word leader or prince. The new firm, which also invested in both US and Asian stocks, was similar to a hedge fund, but its assets consisted entirely of Mr. Hwang’s personal assets and some family members. The system shielded archeology from regulatory scrutiny due to lack of public investors.

Goldman Sachs, which had lent him to Tiger Asia, initially refused to deal with archaeologists. JPMorgan Chase, another “major broker,” or large lender for trading firms, also stayed away. But as the firm grew, eventually reaching more than $ 10 billion in assets, according to someone familiar with the size of its holding, its greed became irreversible. Archeogos was trading stocks on two continents, and banks could levy a large fee on the trades he arranged.

Goldman later changed course, and in 2020 became the firm’s principal broker, along with Credit Suisse and Morgan Stanley. Nomura also worked with him. JPMorgan refused.

By the beginning of this year, Mr. Hwang had grown fond of a handful of shares: ViacomCBS, which had high hopes on its nascent streaming service; Discovery, another media company; And Chinese stocks including e-cigarette company RLX Technologies and education company GSX Techedu.

By January, ViacomCBS’s stock had risen to $ 50 when it traded a little over $ 12 a year ago. Mr. Hwang continued to hold his stake, people familiar with his business said, through complex positions he arranged with banks called “swaps” that gave him economic exposure and returns – but not actual ownership of the stock.

By mid-March, as the stock moved toward $ 100, Mr. Hwang had become the single largest institutional investor in ViacomCBS, according to them and a New York Times analysis of public filings. People were valued at $ 20 billion. Because Archaeos’ stake was increased by borrowing money, if ViacomCBS unexpectedly reversed, it would have to pay banks to cover the deficit or be wiped out quickly.

On Monday 22 March ViacomCBS announced Plans to sell the new shares to the public are expected to generate $ 3 billion in new cash to fund its strategic plans. Morgan Stanley was running the deal. As bankers harassed the investor community, they were counting on Mr. Hwang to be the anchor investor who would buy at least $ 300 million in shares, with four people said to have been involved with the offer.

But between the announcement of the deal and its completion on Wednesday morning, Mr. Hwang changed plans. The reasons are not entirely clear, but RLX, the Chinese e-cigarette company, and education company, GSX, both spiraled into Asian markets around the same time. His decision ended the Viacom fund fund raising effort with $ 2.65 billion in new capital, well short of the original target.

ViacomCBS executives were not aware of Mr. Hwang’s huge impact on the company’s share price, nor did he cancel plans to invest in the share offering until, after it was completed, the two close to ViacomCBS people said. They were disappointed to hear this, people said. At the same time, investors who had gained a larger-than-expected stake in the new share offering and saw it shrink, were selling the stock, lowering its price even further. (Morgan Stanley declined to comment.)

As of Thursday, March 25, the Archgos was in critical condition. ViacomCBS’s plumbing stock price was seeking “margin calls,” or additional cash or assets from prime brokers that the firm could not fully cater to. Hoping to buy time, archaeologists signed an agreement with their lenders The meeting was called, asking patiently that it was a quietly unloaded property, said a person close to a firm.

Those hopes were destroyed. Sensing an imminent failure, Goldman began selling the Archgos’ property the next morning, followed by Morgan Stanley to withdraw his money. Other banks soon followed suit.

As the shares of Viacom CBS flooded on Friday due to heavy sales by banks, Mr. Hwang’s wealth sank. Credit Suisse, which worked slowly to reduce losses, announced the possibility of significant losses; Nomura announced $ 2 billion in losses. Goldman terminated his position but did not file a loss, a person familiar with the matter said. ViacomCBS shares are down more than 50 percent since they reached their peak on March 22.

Mr Hwang has laid low, issuing only a short statement, calling it a “challenging time” for archaeologists.

Kitty bennett Contributed to research.

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