(Bloomberg) -- More former Archegos Capital Management employees want to seek lost salaries and bonuses from ex-boss Bill Hwang, who is being ordered to pay financial restitution after he was sentenced to 18 years in prison for fraud and market manipulation.
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“Multiple former Archegos employees” are seeking to join five who’ve already been awarded $10 million, Manhattan federal prosecutors said in a Wednesday court filing. The judge has given those five priority over banks to which Hwang owes $9.4 billion.
“The impact of their losses is more direct” than the banks, US District Judge Alvin Hellerstein said at a hearing last month at which he confirmed Hwang’s 18-year prison term.
For banks, including Credit Suisse Group AG , Nomura Holdings Inc. and Morgan Stanley, recovering from Hwang is likely a distant dream, but it may be a more realistic prospect for his workers. Though he was once worth more than $30 billion, the Archegos founder said in November that his net worth is now around $55 million. Hwang’s non-profit Grace and Mercy Foundation also has around $500 million that victims may try to collect.
Prosecutors proposed a process for the additional workers to make claims and for Hellerstein to decide whether they can also be paid.
Hwang was convicted in July of misleading Wall Street banks into helping him inflate the value of Archegos’ highly concentrated portfolio to as high as $36 billion before the bubble burst. Its counterparties lost billions, and the scandal was a major factor in the later demise of Credit Suisse.
Former Archegos managing director Brendan Sullivan separately sued Hwang in 2022 for $50 million, claiming the Archegos head coerced employees into investing part of their bonuses with the firm. Sullivan also testified as a prosecution witness against Hwang.
Former Archegos Chief Financial Officer Patrick Halligan, who was convicted alongside Hwang, will be sentenced on Jan. 27 and may also be subject to a restitution order.
The case is US v. Hwang, 22-cv-05675, US District Court, Southern District of New York (Manhattan).
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