Archegos Capital Management’s Bill Hwang asked the judge in his criminal fraud case to let him demand evidence from Credit Suisse Group AG, Goldman Sachs Group Inc., Morgan Stanley and other big banks, saying they “played a pivotal role” in the firm’s implosion.
Hwang was charged last year with fraud over the collapse of Archegos, which at one point held market positions valued at $160 billion, according to prosecutors. The meltdown cost banks $10 billion. Hwang says documents from the banks, which acted as counterparties in swap transactions, “go to the crux” of his defense and should be presented to the jury.
“They will show that Mr. Hwang did not use his lawfully executed swap transactions to artificially impact the prices for the underlying stocks,” Hwang’s lawyers said in court papers filed in Manhattan federal court on Thursday.
Hwang is also seeking to subpoena evidence from UBS Group AG, Mitsubishi UFJ Financial Group Inc., Deutsche Bank AG, Macquarie Group Ltd., Nomura Holdings Inc., Bank of Montreal and Mizuho Bank, as well as from Jefferies Group LLC.
Hwang has pleaded not guilty to charges of racketeering conspiracy, fraud and market manipulation. Also charged in the case is former Archegos Chief Financial Officer Patrick Halligan, who has pleaded not guilty as well. They are set to go to trial in February.
Hwang is seeking information from all the banks about their efforts to hedge exposure to the swaps, their method for trading limits and margin requirements for Archegos, risk management and customer onboarding procedures, and the money they made from the swap transactions.
In addition, he wants documents from Goldman Sachs and Morgan Stanley about big share sales of the securities he is charged with trading illegally, citing reports that those banks received subpoenas from the Justice Department and the Securities and Exchange Commission relating to block trading.
He is also seeking documents from Morgan Stanley on the secondary offering of Viacom stock in March 2021.
Credit Suisse, Goldman Sachs, Morgan Stanley and Nomura declined to comment. The other banks had no immediate comment or didn’t immediately respond to messages.
The case is US v. Hwang, 22-cr-00240, US District Court, Southern District of New York (Manhattan).
(Updates with calls to banks for comment.)
