Justice Department investigates banks for alleged collusion in Archegos liquidation

The Justice Department is investigating several major banks for colluding to liquidate the failed $36 billion investment firm Archegos Capital Management, owned by convicted fraudster Bill Hwang, the report said.

Federal investigators in San Francisco are investigating whether Credit Suisse, Nomura Holdings and UBS Group conspired to control prices and minimize losses totaling $10 billion while conducting emergency talks to liquidate Archegos in March 2021, Bloomberg News reported.

The three lenders reached an agreement to sell part of their exposure after losing billions. Credit Suisse later collapsed and had to be rescued by its Swiss rival UBS Group.

The Justice Department’s antitrust division is examining whether it can charge the banks under the 134-year-old Sherman Act, which was originally designed to curb monopolies.

The Post has reached out to the Justice Department, UBS and Nomura for comment.

Hwang, whose net worth at one point reached about $20 billion, was convicted earlier this year of defrauding banks and manipulating stock prices to lend large sums of money to concentrated bets, artificially inflating their value.

Archegos, a family investment firm founded by former hedge fund manager Hwang, went bankrupt three years ago after using a risky strategy known as “total return swaps” — in which it borrows heavily to make big bets on a small number of stocks without actually owning those securities.

At its peak, prosecutors said Archegos had assets of $36 billion and stock investments worth $160 billion.

As stock prices collapsed in March 2021, banks demanded additional deposits that Archegos could not provide.

The banks then sold shares backing Hwang’s swaps, which allegedly wiped out $100 billion in value for shareholders and billions for the banks, including $5.5 billion for Credit Suisse, now part of UBS, and $2.9 billion for Nomura Holdings.

Hwang, 60, has pleaded not guilty to one count of conspiracy to commit criminal extortion and 10 counts of fraud and market manipulation.

His lawyers said it was “the most aggressive open market manipulation case ever brought by prosecutors.”

Hwang’s deputy at Archegos, CFO Patrick Halligan, was also convicted of similar charges. He faces up to 20 years in prison on each charge.

The renewed scrutiny of banks is likely to further sour sentiment on Wall Street toward the Biden-Harris administration, particularly its top antitrust officials.

Jonathan Kanter heads the Justice Department’s antitrust division, while the Federal Trade Commission is headed by Lina Khan, whose aggressive policies have irritated business leaders.

Kanter and Khan are particularly keen to enforce antitrust laws against big tech companies like Google, Meta, Amazon and Apple.

With postal wires