Archegos' Bill Hwang Seeks Dismissal of His $36-B Fraud Case

Bill Hwang is seeking the dismissal of his US fraud indictment over the collapse of his once-$36 billion Archegos Capital Management LP, saying prosecutors committed misconduct by sandbagging him when building their case, Jonathan Stempel reported for Reuters.

Photo Insert: In a separate filing, Hwang and co-defendant Patrick Halligan, Archegos' former chief financial officer, said their indictment should be dismissed because Archegos' trading activity was "entirely lawful."

Hwang made the request in a Friday night filing in Manhattan federal court, where he has pleaded not guilty to fraud and racketeering conspiracy charges over Archegos' March 2021 demise.

Hwang's lawyers said Department of Justice (DOJ) prosecutors concealed prior to his arrest how Hwang had been their prime target, the supposed "mastermind" of a vast market manipulation scheme, and induced him to divulge his defense strategy.

"The government's conduct cannot be accurately described as anything other than deceitful," the lawyers said, calling the probe a "sham."

Archegos imploded when it failed to meet margin calls following trades through so-called total return swaps, leaving banks such as Credit Suisse Group AG and Nomura Holdings Inc. with about $10 billion of losses.

In a separate filing, Hwang and co-defendant Patrick Halligan, Archegos' former chief financial officer, said their indictment should be dismissed because Archegos' trading activity was "entirely lawful," using methods that are "clearly permitted by the existing regulatory structure."

A spokesperson for US Attorney Damian Williams in Manhattan declined to comment on Saturday.

In alleging prosecutorial misconduct, Hwang's lawyers said the government communicated frequently with them over six months, with Hwang sitting for two six-hour interviews, without disclosing that it viewed Hwang as a target and not merely a "subject" of its probe.

These discussions, the last occurring two days before Hwang's April 27 arrest, "revealed what has now become (as prosecutors doubtless knew it would) his defense strategy," Hwang's lawyers said.

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