A federal jury in Manhattan found 60 year-old Sung Kook “Bill” Hwang guilty on multiple counts of fraud for lying to lenders over billion dollar wagers on stocks including streaming service provider ViacomCBS. Hwang lost it all in March 2021 after the forerunner of Paramount shocked markets with a surprise share sale which brought down his house of cards. 

“This verdict should send a resounding message that this office will continue to police the financial markets with an eagle eye and swiftly hold accountable those who think they can cheat the system,” U.S. federal prosecutor Damian Williams said in a statement on Wednesday.

Jury members sided with federal prosecutors after star witnesses including Archegos’ former head of risk and its head trader each testified they misled creditors on the size and concentration of their bets in an effort to juice returns.

Also convicted of making false assurances was Hwang’s 47 year-old chief financial officer, Patrick Halligan. 

CFO intends to appeal jury verdict

The duo are accused of lying to a number of investment banks, most famously Credit Suisse. Fatally wounded by the Archegos scandal, trust in the Zürich lender evaporated despite numerous attempts to restore confidence in its risk culture. It was swallowed up by UBS last year in the aftermath of Silicon Valley Bank’s spectacular collapse. 

The two now face up to 20 years in prison for each of their multiple fraud counts. Both men remain free on bail ahead of a sentencing date scheduled for October 28.

Lawyers for Hwang could not be reached by Fortune for comment, but Halligan’s lawyer, Mary Mulligan, told the media her client would fight on. “We intend to appeal and believe our client will be exonerated,” she was quoted by outlets as saying.

Big red flags early on

Founded in 2001 and formerly known as Tiger Asia, Hwang’s firm was a so-called “Tiger Cub”, a money manager launched by alumni of Tiger Management, the hugely successful hedge fund run by Julian Robertson in the 1990s.

But Hwang’s recent actions were not the first time he caught the attention of prosecutors. After pleading guilty to charges of U.S. federal wire fraud in 2012 in relation to insider trading of Hong Kong-listed Chinese bank stocks, his Tiger Asia fund returned assets to external clients, transformed into a family office to speculate on its own behalf and rebranded itself as Archegos. 

By that point, Hwang was already a significant client of Credit Suisse’s prime brokerage desk, which caters to a bank’s most lucrative trading clients like hedge funds and family offices with a range of tailored services.

‘Isolated, one-time event’

An internal investigation by Credit Suisse found many of its staff failed to flag warning signs to upper management when it came to doing business with the high-roller.

The fees made by trading with Hwang were generating millions of dollars in revenue, and the brokerage failed to terminate the relationship even after Hong Kong authorities banned Hwang from trading stocks on its exchange for four years.

U.S. bank managers reported to superiors in Zürich it was only an “isolated, one-time event” in an otherwise fruitful relationship, and business continued.

Streaming share sale unwittingly lights fuse

Fast forward to 2021 and Hwang’s family office appeared to flourish: growing net assets from half a billion at its outset to $10 billion. What analysts didn’t know was that Hwang had seemingly been running from one Wall Street investment bank to the next to borrow money for his speculative bets concentrated in a number of buzzy tech and media stocks like ViacomCBS and Tencent Music Entertainment.

It all came tumbling down that March, when ViacomCBS announced a $3 billion share sale. The industry was enjoying a pandemic lockdown-era gold rush in streaming stocks and CEO Bob Bakish needed to build up a content library sizeable enough for its Paramount+ service to take on Netflix and Disney. 

Unknowingly Bakish lit a fuse that caused Hwang’s fund to collapse upon itself. With $5.1 billion invested, ViacomCBS was Hwang’s single largest long position and the impending dilution from the stock sale promptly caused the price to sag.  

Emergency sale to rival UBS

While alarmed Credit Suisse risk managers scheduled several calls for the firm to demand Archegos post additional collateral as insurance—all of which were cancelled at the last minute by Hwang’s team—its prime brokerage desk helped ensure the bank provided a further $2.4 billion in these crucial few days leading to its collapse. 

When rivals on Wall Street began to get wind upon learning of Archegos’s cash crunch, several banks liquidated large portions of their Archegos exposure, wiping $100 billion off of various securities in the process and plunging Hwang’s firm into a death spiral. 

By the time Zürich finally demanded Hwang make a $2.8 billion deposit to cover their risk, he told the Swiss bank margin calls from other prime brokers had exhausted its reserves. Credit Suisse and, to a much lesser degree, its Japanese peer Nomura were left holding the proverbial bag. 

Credit Suisse afterwards could not shake a reputation as Europe’s most scandal-ridden bank and when SVB collapsed, the resulting sector-wide tremors proved too much. The Swiss government stepped in to broker an emergency rescue by its cross-town rival UBS, ending nearly 170 years of history.