Archegos founder Hwang released on bail after fraud charges

STORY: Archegos, which had $36 billion in assets, collapsed last year when it was caught short on highly leveraged trades.

Among the biggest fund blow-ups in years, the scandal roiled Wall Street, sparked a fire sale in stocks including ViacomCBS VIAC.O and Discovery Inc DISCA.O and caused Credit Suisse CSGN.S, Nomura Holdings 8604.T and Deutsche Bank DBKGn.DE, among other lenders, to lose billions on their trades with Archegos.

Prosecutors on Wednesday alleged that Hwang amassed his huge equity exposures by lying to the banks in order to increase Archegos' credit lines. He then used derivatives he traded with them to manipulate the underlying shares and ratchet up his returns.

The U.S. Securities and Exchange commission, in a separate civil complaint also brought on Wednesday, said Hwang and Archegos "engaged in a brazen scheme to manipulate the market" and "propped up a $36 billion house of cards" through a cycle of manipulative trading and lying to banks to obtain additional loans.

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