Trial Begins for Archegos Capital Management Founder and CFO Accused of Market Manipulation

The trial of Bill Hwang, the founder of Archegos Capital Management, and his former CFO Patrick Halligan has begun in New York City, with prosecutors accusing them of manipulating markets through secret trades in derivatives that led to the collapse of their hedge fund. The trial, which started on Monday, has shed light on the alleged fraudulent activities that cost corporations, banks, and brokerages billions of dollars.

According to prosecutors, Hwang and Halligan engaged in a scheme to inflate the stock price of publicly traded companies by lying to banks and using billions of dollars to grow their portfolio exponentially. The prosecution described their private investment fund as “a house of cards, built on manipulation and lies.”

Hwang’s attorney, Barry Berke, has maintained his client’s innocence, stating that the prosecutor’s theory is flawed and that Hwang did not live the life of a billionaire. The indictment alleges that Hwang misled market participants into believing that the prices of stocks in the fund’s portfolio were the result of natural market forces, when in reality, they were manipulated through deceptive conduct.

The trial has also revealed that Hwang first invested his personal fortune before borrowing funds from major banks and brokerages to expand the scheme. The indictment stated that Hwang’s risky maneuvers made the firm’s portfolio highly vulnerable to price fluctuations, leading to margin calls that wiped out billions in market value.

As the trial continues, the financial world is closely watching the outcome, as the case has significant implications for the regulation of hedge funds and the accountability of financial institutions. Hwang and Halligan have pleaded not guilty, while other key figures in the case have already pleaded guilty and are cooperating with prosecutors.