Archegos founder Bill Hwang is headed to trial over the collapse of a $36 billion fund a job

Sung Kook “Bill” Hwang arrived in court Wednesday for the start of a criminal racketeering trial over the collapse of Archegos Capital Management, facing charges that he and his deputy broke the law in a stock scheme that collapsed in just days in 2021.

Hwang appeared in a dark suit and purple tie in a federal courtroom in Manhattan on the first day of screening potential jurors.

Potential jurors were called into the judge’s chambers one by one for an initial round of questioning, which will focus on whether they can sit through the trial’s expected eight weeks.

Those who pass that hurdle will face more detailed questions about their suitability on Thursday before a final panel is chosen.

The trial will address the collapse of Hwang’s lightly regulated family investment office, which prosecutors allege caused shareholder losses of more than $100 billion in companies in his investment portfolio.

Federal prosecutors accuse Hwang of using financial derivatives to secretly amass positions in multiple stocks that were so large that they outpaced the shares of the companies’ largest investors, sending stock prices soaring.

They also allege that Hwang and former Archegos CFO Patrick Halligan then lied about their holdings to maintain their business relationship with global banks.

Hwang and Halligan are charged with racketeering conspiracy. Hwang faces 10 additional counts of fraud and market manipulation, and Halligan faces two additional counts of fraud.

Both men have pleaded not guilty and are expected to argue that prosecutors are pushing a new and illogical theory of market manipulation. A number of lawyers told Reuters that this case may be difficult for the prosecution.

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Hwang’s lawyers have called the case “the most aggressive open market manipulation case ever brought” by prosecutors.

Each charge carries a maximum possible sentence of 20 years.

Archegos chief trader William Tomita and chief risk officer Scott Baker have pleaded guilty to related charges and are expected to testify at trial.

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Opening statements are expected Monday before 12 jurors and four alternates. The judge said it was unlikely there would be proceedings on Friday.

Archegos’ collapse in March 2021 stemmed from Hwang’s use of financial contracts known as total return swaps to acquire large stakes in his preferred holdings without actually owning the stock.

Archegos borrowed aggressively to bolster trading capacity, and at its peak had $36 billion in assets and $160 billion in equity exposure, authorities said. The stock price decline in March 2021 led to margin calls that Archegos was unable to meet.

This led some banks to unload stocks backing their swaps, causing huge losses for Archegos and its lenders, such as Credit Suisse, now part of UBS, and Nomura Holdings.

U.S. District Judge Alvin Hellerstein, who is overseeing the trial, denied Hwang and Halligan’s request to dismiss the case last year.

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