The Commodity Futures Trading Commission (CFTC) has filed a fraud complaint in the U.S. District Court for the Southern District of New York against Archegos Capital Management, LP and its Chief Financial Officer, Patrick Halligan, of Syosset, New York. The charges stem from a scheme to mislead swap counterparties regarding the firm’s financial position.
Simultaneously, the CFTC issued orders settling charges against two former Archegos employees: William Tomita, formerly Head Trader and residing in Palm Beach, Florida, and Scott Becker, formerly Director of Risk Management, of Goshen, New York. Both Tomita and Becker have admitted their involvement and agreed to cooperate with the investigation.
According to the CFTC, Archegos and Halligan engaged in a deliberate effort to provide false and misleading information – and to omit crucial details – to swap counterparties concerning the size of their positions, available unencumbered cash, and the overall risk associated with Archegos Fund, LP’s investment portfolio. The alleged scheme ran from March 2020 to March 2021.
The complaint alleges that Archegos misrepresented its holdings and liquidity to secure additional trading capacity, maintain favorable margin rates, and satisfy margin calls. As a result of these actions, Archegos Fund’s swap counterparties suffered collective losses exceeding $10 billion.
The CFTC is seeking restitution for the defrauded counterparties, disgorgement of any ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and permanent injunctions against future violations of the Commodity Exchange Act and CFTC regulations.
The orders against Tomita and Becker detail their participation in the scheme to expand Archegos’ swap trading positions. Both have entered into cooperation agreements with the Division of Enforcement and face immediate cease and desist obligations, with further sanctions to be determined in subsequent proceedings. CFTC officials emphasized the importance of honesty and transparency in swaps markets and vowed to pursue fraudulent activity, even from entities like family offices that currently lack direct CFTC oversight.
Source: CFTC.gov
Related Federal Cases
- Jared Mitchell, Securities Fraud, New York · Florida
- Gerald Cocuzzo, Securities Fraud, New York 2024 · Florida
- Alton Plunkett, Tax Fraud, New York NY, 2023 · Florida
- Marc Henry Menard, Investment Fraud Scheme, New York, 2023 · Pennsylvania
- Letitia James, Citibank Fraud Lawsuit, New York NY, 2023 · Florida
