Multibillion-Dollar Fraud Trial Against Archegos Founder Nears Its End

The collapse of Archegos Capital Management in spring 2021, which caused billions in losses for a handful of Wall Street banks, was the result of “lies and manipulation” by Bill Hwang, the firm’s founder, a federal prosecutor told a jury in Manhattan on Monday.

During closing arguments, Andrew Thomas, the prosecutor, said that Mr. Hwang had defrauded the banks and other traders in the market by artificially inflating stock prices to pump up the size of Archegos.

Barry Berke, a lawyer for Mr. Hwang, said the government was criminalizing his client’s high-risk trading only because it caused losses for the banks that had lent him billions of dollars.

“Mr. Hwang bet on companies he believed in,” Mr. Berke said. “That is not manipulative.”

Mr. Hwang, 60, is charged with 11 counts of securities fraud, wire fraud, conspiracy, racketeering and market manipulation. If convicted on all counts, he could spend the rest of his life in prison.

The sudden collapse of Archegos not only caused nearly $10 billion in losses for Wall Street banks, but also wiped out much of Mr. Hwang’s personal fortune. The firm, which Mr. Hwang had set up in 2013 as a family office, was little-known on Wall Street at the time, even though it employed a few dozen people and invested tens of billions of dollars in the stock market.

At its peak, Archegos managed $36 billion for Mr. Hwang and his family and controlled stocks worth more than $100 billion. The firm, which operated like a hedge fund but with limited regulatory oversight, amassed such large stock positions by using sophisticated derivatives and borrowed money provided by Wall Street banks to inflate its holdings.