Archegos founder, who lost $36 billion in a week, is now on trial for one of the biggest frauds in US history

A billionaire Wall Street financier who notoriously lost tens of billions in a matter of days has returned to court for his blockbuster fraud trial. 

Sung Kook 'Bill' Hwang, 60, the founder of Archegos Capital Management, is alleged to have triggered over $100 billion in shareholder losses when his family office fund failed to meet margin calls in March 2021. 

He was arrested in April 2022 and charged with fraud, racketeering and conspiracy, as prosecutors claim he carried out a scheme to defraud investors by lying about his firm's portfolio, which at one point stood at over $100 billion. 

If convicted, he faces a maximum of 380 years behind bars, in what would amount to one of the largest frauds in US history.  

At the start of his trial this week, the court heard from a bank manager who testified about Archegos' attempts to offload hundreds of millions of dollars in a fire sale as Hwang's house of cards began to fall. 

Sung Kook 'Bill' Hwang, the founder of Archegos Capital Management, pictured arriving at Manhattan Criminal Court this week, where he is facing charges of fraud, racketeering and conspiracy 

Hwang's family office Archegos Capital Management once had upwards of $100 billion under management, before it defaulted on its loans and lost billions for investors in March 2021 

The son of a Christian pastor, Hwang was born in Korea before emigrating to the US in 1982. His early career was at Tiger Management, and after he founded a spinoff fund, Tiger Asia Management, the company was charged with insider trading. 

Tiger Asia pleaded guilty to criminal wire fraud and agreed to pay $60 million, but Hwang settled without admitting guilt. 

Hwang set up his family office in 2013 to manage hundreds of millions of dollars that he made at his former hedge funds, and reportedly caught the eye of regulators after he rapidly built his wealth to over $30 billion. 

He was also known to fly under the radar and lived modestly in New Jersey with his wife, while running bible reading sessions with the local community and eschewing his billionaire status. 

He made large investments in major companies including Discovery Inc. and ViacomCBS Inc., with much of its holdings slipping under the radar as family offices are not subjected to the same regulatory scrutiny as regular hedge funds. 

Alongside his allegedly fraudulent funds, Hwang also ran the Grace and Mercy Foundation for his philanthropic efforts to 'support the poor and oppressed', and at the end of 2022 Bloomberg reported it had $528 million in assets. 

At the beginning of his trial this week, prosecutors sought to exclude Hwang's 'prior good acts' from evidence presented to jurors about his character. 

Hwang, pictured in 2013 the same year he opened his family office, took heavy losses within a matter of days in March 2021 that led several banks to lose billions 

Despite his billions, Hwang flew under the radar and lived in a modest home in New Jersey (pictured) with his wife, where he was known to regularly conduct bible reading sessions with the neighborhood 

Hwang, pictured arriving at court on Thursday, was once worth over $30 billion, but prosecutors say he was able to conceal much of his wealth through a lack of regulation on family offices 

Patrick Halligan, the former Chief Financial Officer of Archegos, is also facing charges alongside Hwang for his alleged role in the collapse 

With over $100 billion in assets under management at its peak, Hwang's firm took a heavy loss when Viacom CBS announced a $3 billion secondary stock offering in March 2021, which triggered a 10 percent share price drop. 

Alongside new regulations introduced by the SEC at the time that hurt his holdings in China, Archegos suddenly faced a slew of margin calls as its collateral fell too low. 

According to prosecutors, Hwang made a desperate attempt to meet demands by withdrawing cash and rapidly trading to prop up the value of his holdings.  

Jennifer Miranda, a managing director in the risk management group at Jefferies Financial Group, testified on Wednesday over a March 2021 call she received from Archegos' head of risk management, Scott Becker, as the fund made these withdrawals. 

She said Becker called her to urgently withdraw roughly $415 million, and said there 'seemed to be an urgency about the call.' 

'What's the emergency? Why?' she recalled on the stand, reports Bloomberg. 

While Miranda was confused at the time, she was allegedly being called as part of an urgent effort from Archegos to trade and move money around to meet a wave of margin calls from banks. 

Within two days, Archegos missed these margin calls, leading to a staggering loss of over $10 billion from its banking partners, including Jefferies, Morgan Stanley and Nomura Holdings Inc. 

The fallout notably cost Credit Suisse over $5.5 billion alone. 

If convicted, Hwang (pictured with his family earlier in his career) faces a maximum of 380 years behind bars, in what would amount to one of the largest frauds in US history 

Hwang set up his family office in 2013 after making hundreds of millions at a former hedge fund, and reportedly caught the eye of regulators after he rapidly built his wealth to over $30 billion

Becker has already pleaded guilty in the case, and is set to testify as soon as next week over his role in the alleged scheme. 

Miranda testified that despite the apparent rush to withdraw funds, Becker told her that the firm was not having any money issues, and was holding around $7 billion at the time. 

Based on conversations with Becker, Miranda said that her bank allowed Archegos to withdraw $240 million - without knowing that Archegos was struggling to make ends meet with other banks. 

She said that Jefferies went on to take a $40 million hit when it was forced to liquidate its Archegos positions. 

This was reportedly presented by prosecutors to allege a pattern of lying to investors about Archegos' financial security, which also included previous testimony from a former UBS risk manager. 

In that instance, former UBS manager Bryan Fairbanks testified that Archegos was able to increase its exposure from $8 billion to $10 billion by claiming that it had up to 40 percent of its equity in free available cash. 

He said that further claims that Archegos could liquidate its investments within a matter of days 'gave us some comfort.' 

When the margin calls were missed and Archegos defaulted on its loans, UBS went on to lose a total of $774 million. 

In total, jurors are expected to hear testimony from 11 bank representatives who facilitated Archegos' attempts to make the margin calls, which prosecutors argue was central to the scheme of propping up his firm's value. 

Because Archegos was a family office instead of a full-fledged hedge fund, it was not subjected to the same levels of regulation and scrutiny as a hedge fund, which prosecutors said allowed Hwang to use return swaps. 

By using return swaps, Archegos was able to conceal the true risk of their huge portfolio, while raking in huge credit exposure from banks that allowed it to make high-risk trades. 

Despite being worth upwards of $30 billion at his peak, Hwang was not as well-known as other Wall Street whales with similar fortunes because of this tactic. 

He was also known not to make a show of his fortune, and lives in a modest home in New Jersey while routinely showing up at his local church.