NEW YORK — A fraud trial began Monday for the founder of a hedge fund that cost leading global investment banks and brokerages billions of dollars when it collapsed.
A prosecutor portrayed Bill Hwang, the founder of Archegos Capital Management, as a greedy man hoping to become a Wall Street legend while his lawyer said he was an honest investor fearless about losing money in stocks he believed in. Hwang is on trial along with his former CFO Patrick Halligan.
Hwang and his co-conspirators artificially inflated nearly a dozen stocks before a meltdown three years ago wiped out the company he created and caused the collapse of over $100 billion in market value, prosecutors said.
Prosecutors have accused Hwang of lying to banks to get billions of dollars that his New York-based private investment firm then used to inflate the stock price of publicly traded companies and grow its portfolio from $10 billion to $160 billion.
Their scheme involved secret trading in stock derivatives that enabled their private investment fund to secretly build large positions in companies before it was unmasked as ''a house of cards, built on manipulation and lies,'' Assistant U.S. Attorney Alexandra Rothman told jurors in an opening statement.
''These two men made fraud their business,'' Rothman said. ''All because the defendant, Bill Hwang, wanted to be a legend on Wall Street.''
She said Hwang already was a billionaire when he employed his illegal methods in March 2020 as the pandemic hit, working from his Manhattan apartment to sell off many of Archegos's previous market positions after COVID-19-related losses and begin building extraordinarily large positions in just a few securities.
''He had it all, but it wasn't enough,'' Rothman said.