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Hedge fund managers face trial following the collapse of Archegos, which lost billions of dollars

Bill Hwang, Archegos Capital Management (Via Ron Hales/Shutterstock)

The trial began on Monday for the founder of a hedge fund that caused major global investment banks and brokerages to lose billions of dollars when it collapsed.

Bill Hwang, founder of Archegos Capital Management, was portrayed by prosecutors as a greedy individual aiming to achieve fame on Wall Street. His lawyer, however, described him as an honest investor willing to take risks on stocks he believed in. Hwang and his former CFO Patrick Halligan are both on trial.

Prosecutors allege that Hwang and his associates artificially inflated the prices of nearly a dozen stocks before a crisis three years ago led to the collapse of his firm and wiped out over $100 billion in market value.

Bill Hwang, Archegos Capital Management (Via Ron Hales/Shutterstock)

According to prosecutors, Hwang deceived banks to secure billions of dollars, which his New York-based firm then used to inflate stock prices and grow its portfolio from $10 billion to $160 billion. They claim the scheme involved secretive trading in stock derivatives that allowed the firm to amass large positions in companies before their methods were exposed.

Assistant U.S. Attorney Alexandra Rothman told jurors that Hwang and Halligan “made fraud their business” and accused Hwang of wanting to achieve legendary status on Wall Street.

She noted that Hwang, who was already a billionaire, used illegal methods in March 2020 during the pandemic, working from his Manhattan apartment to sell off Archegos’s existing market positions following losses related to COVID-19, and to build massive new positions in a small number of securities.

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