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Billionaire takes Wall Street on wild ride

By HENG WEILI in New York | China Daily | Updated: 2021-04-13 06:54
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Credit Suisse was among the companies that experienced heavy losses after Archegos Capital Management defaulted on margin calls. ARND WIEGMANN/FILE PHOTO/REUTERS

Seldom noticed

Traders said Hwang became one of Wall Street's biggest customers, which may account for blue-chip companies overlooking his troubled regulatory record.

According to media reports, he tended to keep to himself.

Bloomberg Wealth reported: "Even on Wall Street, few ever noticed him. Until suddenly everyone did."

Unlike other money managers, Hwang avoided the financial media and never made the annual billionaires lists published by outlets such as Forbes. When he was quoted in the media, it was mostly about his Christian faith and charitable contributions.

Hwang, 57, and his wife, who have a college-age daughter, live quietly in an affluent, predominantly Asian area of Tenafly, New Jersey, a 30-minute drive from his office on Seventh Avenue in Manhattan, which overlooks Central Park.

A recent story on Bloomberg's website said, "A generous benefactor to a range of unglamorous, mostly conservative Christian causes …Hwang eschews the trappings of extravagant wealth, rides the bus, flies commercial and lives in what is, by billionaire standards, humble surroundings in suburban New Jersey."

In 2006, Hwang established the Grace and Mercy Foundation, a nonprofit based in New York that sponsors Bible readings and religious book clubs. He raised its assets from $70 million to $500 million in less than a decade. The foundation has donated tens of millions of dollars to Christian organizations.

US Internal Revenue Service records show the foundation was involved in some of the types of complex financial transactions that Hwang used at Archegos. While the foundation received millions in donations of stocks, records show it also bought and sold derivatives with mixed results.

In 2016 and 2017, Hwang contributed $210 million of Netflix stock to the foundation, and from 2015 to 2018, he gave it $236 million of Amazon stock, tax records show. He donated another $48 million of Expedia and Facebook stock. Hwang also gave the charity smaller amounts of stock in Facebook, Hawaiian Airlines and Expedia.

From 2007 to 2018, the foundation distributed nearly $80 million, with amounts rising steadily over time, according to the Forbes website. Most of it went to Korean Christian causes.

In a video posted by his foundation in 2019, Hwang said: "I'm not afraid of death or money. The people on Wall Street wonder about the freedom that I have. Ultimately, the most important thing is the Bible.

"When we create good companies through the capitalism that God has allowed, it enhances people's lives.… God delights in those things."

On his being a big investor in LinkedIn, which he described as a company that helps people realize their potential, Hwang said: "Do I think God loves it? Of course! I'm like a little child looking for what I can do today, where I can invest, to please our God."

He said in a 2018 interview: "I'm decreasing the amount of money under my name, in order to do things that God loves. I do it because I like God more than I like money."

Credit Suisse has been in touch with Swiss financial market supervisor FINMA, the Prudential Regulation Authority in the United Kingdom and the US Federal Reserve over the Archegos developments, a source familiar with the matter said.

The US Securities and Exchange Commission and the UK's Financial Conduct Authority have launched preliminary investigations into the Archegos meltdown, according to a different source familiar with the situation.

The SEC said in a statement on March 29, "We have been monitoring the situation and communicating with market participants since last week."

Japanese Finance Minister Taro Aso said on Friday that Tokyo is looking into the financial losses incurred by Japan's Mitsubishi UFJ Financial Group and Nomura, and will share information on the matter with the Bank of Japan and overseas authorities.

Reuters contributed to this story.

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