Archegos Capital Management founder Bill Hwang’s lawyer made his final pitch to a jury poised to start deliberating his fate, arguing the US government’s fraud and market-manipulation case over the meltdown of the prolific investor’s family office “makes no sense.”
During an eight-week trial, Hwang was accused of being the mastermind of a scheme that ensnared half of Wall Street and cost banks $10 billion after he artificially jacked up stock prices. But in closing arguments Monday, his defense team said he was only an aggressive trader who invested in companies he truly believed in.
“The whole theory of their case makes no sense” because prosecutors failed to show during weeks of testimony by government witnesses how Hwang planned to realize a windfall from the alleged scheme, his lawyer, Barry Berke, told the jury. “It literally makes no sense.”
Hwang’s defense is that Archegos experienced a black swan event, a perfect storm of market conditions that led to the collapse of his family office and an inability to meet billions in margin calls. Former Archegos Chief Financial Officer Patrick Halligan is also on trial after pleading not guilty to fraud and racketeering conspiracy.
After hearing five and a half hours of closing arguments Monday, jurors are expected to begin deliberations Tuesday. It will mark the end of a trial that has captivated Wall Street and forced many to revisit the implosion of Archegos in 2021 that reverberated across markets and obliterated Hwang’s $36 billion personal fortune.
“This has been a long case,” Assistant US Attorney Andrew Thomas told jurors. “We have been together for weeks. We have probably looked at 200 different stock charts, but now you have the facts. What happened here was fraud.”
Prosecutors claim Hwang engaged in manipulative trading to artificially inflate stock prices and lied to counterparties, or directed others to, so they’d increase Archegos’ credit limits and fuel a vicious trading cycle. Hwang’s use of swaps hid the true extent of his investments and allowed him to build up huge positions in companies including ViacomCBS and Discovery.
Seizing on Hwang’s strategies — trading aggressively at the market close and in huge volume — Thomas said Hwang made the “extreme look ordinary.”
The prosecutor peppered his closing arguments with metaphors to show how Hwang cared about moving stock prices, not acquiring stock.
“Imagine you’re on the way to the grocery store to buy apples and you say to your friend, ‘Gee, I hope the price of apples rises before I buy them,’” Thomas said. “It doesn’t make any sense.”
Thomas argued that by 2021, Hwang’s trading had created a cycle of fraud, with inflated prices in the Archegos portfolio allowing the firm to withdraw excess margin that was plowed back into the scheme.
The government’s case was centered around two key cooperating witnesses, who previously pleaded guilty, former Archegos risk chief Scott Becker and head trader William Tomita. Becker described lying to banks about the size of Archegos’ positions and liquidity. Tomita spent days on the stand alleging Archegos used manipulative trading strategies, and he painted Hwang as a tough boss who yelled at staff when they took breaks.
Lawyers for Halligan and Hwang took repeated shots at the credibility of both witnesses, reminding the jury that they testified in the hope of receiving lenient sentences for their own criminal misconduct.
At one point, Halligan’s lawyer Tim Haggerty pulled up a simple black and white slide with the words “Scott Becker hates Patrick Halligan.”
“Scott Becker was a clever, relentless manipulating liar when he worked for Archegos, and signing that cooperation agreement did not miraculously turn him into an honest man,” Haggerty said.
During one of the more dramatic points of the trial, Halligan’s lawyers presented text messages Becker had sent years earlier, expressing a wish for his boss to die a painful death.
“Without Scott Becker, there is no case against Patrick Halligan,” Haggerty said.
The case is US v. Hwang, 22-cr-240, US District Court, Southern District of New York (Manhattan).
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