Archegos Capital’s Bill Hwang seeks dismissal of charges for ‘deceitful’ US conduct
- Hwang was duped into assisting the government during meetings with investigators, his lawyer Lawrence Lustberg said
- Hwang was arrested in April and charged with fraud over the collapse of Archegos, which at one point held market positions valued at US$160 billion
Hwang was duped into assisting the government in a number of meetings with investigators who did not tell him when they had decided he was more than a mere “subject” of the investigation, leaving open the possibility that he would not be charged, his lawyer said in a motion to dismiss the indictment late on Friday. Hwang is expected to go on trial in October 2023.
“The government had made its decision long before numerous sessions in which the government elicited information from Mr Hwang and his counsel that would never have been revealed but for the misimpression, fuelled by the government, that the decision of whether to indict had not been made,” Hwang’s lawyer, Lawrence Lustberg, said in a filing in federal court in Manhattan.
Hwang and former Archegos chief financial officer Patrick Halligan, who will go on trial with him, have pleaded not guilty. Hwang was arrested on April 27 and charged with fraud over the collapse of Archegos, which at one point held market positions valued at US$160 billion, according to prosecutors. The two face decades in prison if convicted.
The press office for the US Attorney’s Office in Manhattan declined to comment.
Hwang first started meeting with the US Attorney’s Office in Manhattan on March 14, 2022, according to the documents. He was questioned “extensively” about his selection of stocks, his use of direct stock purchases instead of swaps and other aspects of his trading strategy in sessions that lasted for about six hours, with two breaks, according to the filing.
“Whatever the origins of its interactions with Mr Hwang and his counsel, there came a time when they only continued because the government was not honest with the defence,” Hwang’s lawyers said. “The consequences are that the government now has unique insight into the defence that it should not.”
Archegos sell-off: How a Chinese firm lost half its value in two days
Prosecutors claim Hwang and Halligan repeatedly made materially false and misleading statements about Archegos’ portfolio to large investment banks and brokerages, resulting in steep losses on Credit Suisse Group, Nomura Holdings and Morgan Stanley. The fall of Archegos cost banks US$10 billion and exposed huge problems in how risk is managed.
Hwang’s lawyers blasted the government’s overall case as an “extraordinary” attempt to criminalise “entirely lawful activity” including swap transactions “that were fully executed according to their negotiated terms,” according to the filing.
“It is clear from the indictment that in reality it is the securities markets and the rules that have long regulated them that the government seeks to put on trial,” according to Hwang’s filing.
“Trying to fashion a crime where none exists, the indictment relies upon a novel theory of ‘open-market manipulation’ that has been discredited” by the appeal court in Manhattan, the filing added.
