Prosecutors are set to make their final arguments on Monday in the trial of Sung Kook “Bill” Hwang, the founder of Archegos Capital Management, over his alleged role in the 2021 collapse of his $36 billion hedge fund. The trial, held in Manhattan federal court since March, revolves around the dramatic implosion of Archegos in March 2021, which inflicted $10 billion in losses on global banks and reportedly caused over $100 billion in shareholder losses.
Hwang stands accused of secretly amassing significant stakes in various companies through derivative positions, misleading banks about the extent of Archegos’ holdings to secure billions in loans. Prosecutors contend that Hwang and his associates artificially inflated stock prices by leveraging these positions.
During opening arguments, prosecutor Alexandra Rothman characterized Hwang as driven by greed, despite his billionaire status, risking everything for more wealth, success, and influence.
The 60-year-old Hwang has pleaded not guilty to charges including racketeering conspiracy, fraud, and market manipulation. His defense team has criticized the case as an unprecedented instance of aggressive market manipulation prosecution.
Robert Frenchman, a lawyer experienced in defending market manipulation cases, acknowledged the unconventional nature of the government’s approach but noted that former Archegos insiders who testified painted a damning picture of deception within the firm.
Key witnesses, including Archegos head trader William Tomita and Chief Risk Officer Scott Becker, testified after pleading guilty to related charges and cooperating with authorities.
Patrick Halligan, Hwang’s deputy, faces charges of fraud and racketeering conspiracy for his alleged role in facilitating the scheme and has also pleaded not guilty.
According to the U.S. Attorney’s Office for the Southern District of New York, Hwang’s positions dwarfed those of major institutional investors, artificially inflating stock values. At its peak, Archegos reportedly controlled $36 billion in assets and had exposure of $160 billion to equities.
When stock prices plummeted in March 2021, banks demanded additional collateral that Archegos could not provide, leading to the liquidation of Hwang’s holdings and substantial financial losses for shareholders and banks alike. Credit Suisse, now part of UBS, suffered losses of $5.5 billion, while Nomura Holdings incurred $2.9 billion in losses.
The trial’s conclusion marks a pivotal moment in determining Hwang’s legal fate amid allegations of widespread financial misconduct and deception at Archegos Capital Management.
