((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto)) by Brendan Pierson
Jury selection is expected to conclude Thursday in the racketeering trial of Sung Kook “Bill” Hwang over the 2021 collapse of his $36 billion Archegos Capital Management fund, setting the stage for opening statements and witness testimony next week.
Prosecutors, Bill Hwang’s lawyers and Judge Alvin Hellerstein will have the opportunity to question potential jurors in Manhattan federal court about their backgrounds and possible biases, in a procedure called voir dire. Twelve jurors and four alternate jurors will ultimately be chosen.
Potential jurors were already selected Wednesday to ensure they can participate in the entire trial, which could last up to eight weeks.
The trial will focus on the implosion of Mr. Hwang’s lightly regulated family investment office, Archegos, which prosecutors say caused more than $100 billion in losses for shareholders of his portfolio companies.
Federal prosecutors accuse Mr. Hwang of using financial contracts known as “total return swaps” to secretly accumulate outsized stakes in numerous companies without actually owning the shares.
His positions were so large that they dwarfed those of the companies’ largest investors, driving up stock prices, prosecutors say. At its peak, Archegos had $36 billion in assets and $160 billion in equity exposure.
The fall in stock prices in March 2021 triggered margin calls that Archegos was unable to meet. This led some banks to dump shares securing its swaps, leading to significant losses for Archegos and its lenders, such as Credit Suisse, now part of UBS UBSG.S, and Nomura Holdings
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Prosecutors say Hwang and former Archegos CFO Patrick Halligan, who is also on trial, lied about their assets in order to maintain their business relationships with international banks.
Hwang and Halligan are charged with racketeering conspiracy. Hwang faces ten additional counts of fraud and market manipulation, and Halligan faces two additional counts of fraud. Each count carries a maximum sentence of 20 years.
Both men have pleaded not guilty and are expected to argue that prosecutors are advancing a new and absurd theory of market manipulation.
Hwang’s lawyers described the case as “the most aggressive open market manipulation case ever brought” by prosecutors. Several lawyers told Reuters the case could be difficult for the government.
Archegos chief trader William Tomita and chief risk officer Scott Becker have pleaded guilty to related charges and are expected to testify at trial.
