NEW YORK, March 21 (Reuters) – A U.S. decide on Tuesday signaled he was unlikely to dismiss an indictment accusing Invoice Hwang of fraud within the collapse of his $36 billion Archegos Capital Administration LP, after Hwang accused prosecutors of misconduct for duping him into cooperating with their probe.
U.S. District Choose Alvin Hellerstein heard arguments in Manhattan federal courtroom on whether or not to proceed the felony case over Archegos’ March 2021 collapse, which saddled banks together with as Credit score Suisse Group AG (CSGN.S) and Nomura Holdings Inc (8604.T) with multibillion-dollar losses.
Hwang stated the U.S. Division of Justice hid the way it seen him lengthy earlier than his arrest because the mastermind of an enormous market manipulation scheme, and prosecutors induced him throughout two six-hour interviews and different conferences over six months to reveal his protection technique.
He additionally stated the indictment needs to be dismissed as a result of Archegos’ buying and selling had been lawful, and he shouldn’t be criminally punished solely as a result of it backfired.
Prosecutors have stated they labored in good religion to find out why Archegos collapsed, and handled Hwang pretty.
At Tuesday’s listening to, Hellerstein stated prosecutors have been entitled to vary their minds about their investigation.
He additionally stated extra details have been required earlier than drawing a line between lawful and illegal buying and selling within the case.
Archegos’ collapse occurred in March 2021 after Hwang borrowed aggressively to spice up the efficient measurement of the agency’s market positions in shares similar to ViacomCBS and Discovery to greater than $160 billion, in response to prosecutors.
Authorities stated Hwang unfold his borrowing amongst a number of banks, enabling him to hide the true measurement of bets he made by means of so-called whole return swaps, and the chance of doing enterprise with Archegos. When the costs of a number of the shares fell, Hwang was unable to satisfy margin calls, main banks to dump shares backing the swaps, and inflicting losses for Archegos and others. Credit score Suisse misplaced greater than $5 billion within the debacle.
The case is U.S. v. Hwang et al, U.S. District Courtroom, Southern District of New York, No. 22-cr-00240.
Reporting by Jody Godoy and Jonathan Stempel in New York; Modifying by David Gregorio
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