By Jonathan Stempel
NEW YORK (Reuters) – Bill Hwang, the founder of Archegos Capital Management, on Thursday asked a judge to let him subpoena documents from 10 banks, in an effort to shift blame as he defends against criminal fraud charges that the firm’s collapse was his fault.
In a filing in Manhattan federal court, Hwang said the documents will show that Archegos’ counterparties “played a pivotal role” in the March 2021 collapse of his once-$36 billion firm, and that his swaps trades were legal.
The office of U.S. Attorney Damian Williams, which is prosecuting Hwang, did not immediately respond to a request for comment.
Hwang’s request came three days after UBS agreed to pay $388 million in fines to U.S. and British regulators over poor risk management at Credit Suisse, which lost $5.5 billion when Archegos met its demise.
UBS bought Credit Suisse last month, under pressure from Swiss regulators. Other banks also lost money when Archegos collapsed, but less than Credit Suisse.
Prosecutors accused Hwang of borrowing aggressively to fund total return swaps that boosted Archegos’ exposure to stocks such as ViacomCBS and Discovery to more than $160 billion, and concealing the risks by borrowing from several banks.
Archegos failed after the prices of some of its stocks fell. That caused it to miss margin calls, and banks to dump stocks that had backed the swaps and which they had bought as hedges.
“Any disconnect or attenuation between Archegos’s swaps and its counterparties’ hedges bears directly on the likelihood that Mr. Hwang could have affected, or did affect, the market in the manner alleged in the indictment,” Thursday’s filing said.
Other banks that Hwang wants to subpoena, in addition to UBS, are Bank of Montreal, Deutsche Bank, Goldman Sachs, Jefferies, Macquarie, Mitsubishi UFJ, Mizuho, Morgan Stanley and Nomura.
In March, U.S. District Judge Alvin Hellerstein rejected Hwang’s motion to dismiss his 11-count indictment. Hwang has pleaded not guilty. A trial is scheduled for Feb. 20, 2024.
The case is U.S. v. Hwang et al, U.S. District Court, Southern District of New York, No. 22-cr-00240.
(Reporting by Jonathan Stempel in New York; Editing by Daniel Wallis)
