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Jury hears closing arguments in Manhattan federal court

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Prosecutors: Hwang manipulated stock prices, lied to banks

(Recasts first paragraph, adds details from closing arguments

in paragraphs 5-6 and 12-14)

By Jody Godoy

NEW YORK, July 8 (Reuters) - The 2021 collapse of Sung

Kook "Bill" Hwang's Archegos Capital Management was driven by

"lies and manipulation," a federal prosecutor told a Manhattan

jury on Monday at his criminal trial over the $36 billion

private investment fund's failure.

Jurors heard closing arguments from the prosecution and

defense in Manhattan federal court in the trial of Hwang and

Patrick Halligan, his Archegos deputy and co-defendant.

The trial centers around the implosion of Hwang's family

office Archegos - a spectacular collapse that left global banks

nursing $10 billion in losses and, according to prosecutors,

caused more than $100 billion in shareholder losses at companies

in its portfolio.

Hwang's attorney Barry Berke told jurors Archegos collapsed

due to a series of unexpected events in March 2021, and said

prosecutors have criminalized aggressive but legal trading

methods. Had the banks not lost money, Berke said, "we would

never be here, Mr. Hwang would never be charged with a crime."

Assistant U.S. Attorney Andrew Thomas told jurors that Hwang

manipulated stocks and worked with Halligan to lie to the banks

with which they traded.

"By 2021, the defendants' lies and manipulation had ensnared

nearly a dozen stocks and half of Wall Street in a $100 billion

fraud, a fraud that came crashing down in a matter of days,"

Thomas said.

Testimony in the trial, which began in May, showed that

Hwang directed Archegos employees to lie to banks and trade in

ways intended to drive up the price of stocks he had bet on,

Thomas said. Hwang "behaved as though the rules didn't apply to

him," Thomas added. In fact, Thomas said, the two defendants

"made fraud their business."

Prosecutors have accused Hwang of secretly amassing outsized

stakes in multiple companies without actually holding their

stock. Hwang lied to banks about the size of Archegos'

derivative positions to borrow billions of dollars that he and

his deputies then used to inflate the underlying stocks,

according to prosecutors.

Hwang, 60, pleaded not guilty to one count of racketeering

conspiracy and 10 counts of fraud and market manipulation. His

lawyers have said the case is the "most aggressive open market

manipulation case ever" brought by prosecutors. Halligan, 47,

pleaded not guilty to fraud and racketeering conspiracy.

If convicted, they face maximum sentences of 20 years in

prison on each charge, though any sentence would likely be much

lower and would be imposed by the judge based on a range of

factors.

Archegos head trader William Tomita and Chief Risk Officer

Scott Becker testified after pleading guilty to related charges

and agreeing to cooperate with prosecutors.

Berke told jurors on Monday that Becker testified to lying

but not at Hwang's direction, and that Tomita had told

prosecutors what they wanted to hear.

According to the U.S. Attorney's Office for the Southern

District of New York, which brought the case, Hwang's positions

eclipsed those of the companies' largest investors, driving up

stock prices. At its peak, prosecutors said Archegos had $36

billion in assets and $160 billion of exposure to equities.

When stock prices fell in March 2021, the banks demanded

additional deposits, which Archegos could not make. The banks

then sold the stocks backing Hwang's swaps, wiping out $100

million in value for shareholders and $40 billion at the banks,

including $5.5 billion for Credit Suisse, now part of UBS

, and $2.9 billion for Nomura Holdings ( NMR ).