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Bill Hwang amassed a fortune of $36 billion on Wall Street through his family office, Archegos Capital Management. But over the course of one week in 2021, the firm imploded. Federal prosecutors have since charged Hwang with 11 criminal counts, including securities fraud, wire fraud and racketeering.

Today, Bloomberg’s Sridhar Natarajan and Kathy Burton join host David Gura to discuss Hwang’s rise and fall and why his trial promises to be one of the biggest, and most interesting, in the history of Wall Street.

Read more: He Lost $36 Billion in a Week. Now Bill Hwang Is Fighting to Avoid Prison

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Here is a lightly edited transcript of the conversation:

David Gura: There’s been a lot of action recently in the courts in New York City. A former president is one defendant. The one-time “golden boy of crypto” was found guilty of fraud. And this week, another major trial gets underway. The defendant is Bill Hwang. He may not be as well known … but the outcome of his case could have huge implications for how Wall Street does business. Hwang, a former hedge fund manager, is accused of committing fraud and market manipulation on a massive scale that contributed to the collapse of one of the world’s largest banks. Bloomberg’s Sridhar Natarajan says Archegos Capital Management imploded in just a matter of days:

Sridhar Natarajan: We're talking about his investment firm that had net capital of 36 billion. That was the Tuesday of that week. And then by the end of the week, practically zero.

Gura: Perhaps no financier’s fortune has disappeared so quickly... Hwang’s company Archegos went bust in 2021, and now Hwang’s accused of committing securities fraud and wire fraud, along with racketeering. 11 charges in total, and if he is convicted, Hwang could go to prison for 20 years. He … maintains his innocence. Hwang is not your typical hedge fund billionaire. He is a devout Christian, who has poured hundreds of millions of dollars into a religious charity he started. Hwang shies away from the spotlight. But what really sets him apart, is his modest profile. Sridhar Natarajan and Bloomberg’s Kathy Burton have chronicled Bill Hwang's career for years, and after Archegos collapsed, Kathy and Sri drove to Hwang's house, in New Jersey, with a request for comment.

Katherine Burton: We didn't think he would be there. And then we walked up to his house and we were going to put a handwritten note in the door. And we heard a voice, and there was Bill sitting on his porch in a plastic chair from Costco at a plastic table, sitting there like some normal suburban guy on his porch in his Adidas flip flops.

Gura: That's where Hwang's been holed up, awaiting the start of his trial, which is likely to be a blockbuster.

Today on the show: the rise and fall of Bill Hwang. Who he was, how he made his money – and lost it, and why Hwang’s trial promises to be one of the biggest, and most interesting, in the history of Wall Street.... This is the Big Take, I'm David Gura.

Gura: Bill Hwang made his name on Wall Street, but Bloomberg’s Sridhar Natarajan says Hwang's story … starts half a world away.

Natarajan: So let's go all the way back to 1964. Son of a Korean pastor, lived in South Korea for much of his early life. Middle class family from what, whatever we can gather out there.

Gura: When Hwang was 18, his family moved from South Korea to Las Vegas. He went to college at UCLA, and after graduation, he got his first job in finance.

Natarajan: Didn't really break into one of those top rung Wall Street shops, not the Wall Street elite, not the Goldmans or the Morgan Stanleys but got his break with something called Hyundai Securities.

Gura: And while he was working there, Hwang caught the attention of the billionaire hedge fund manager Julian Robertson, the founder of the firm Tiger Management.

Burton: Julian was a huge, huge name. He was the stock-picking king. And what stood out about Bill was that he brought Julian all these ideas about South Korean stocks, which Julian didn't really have any expertise in.

Gura: Hwang became one of Robertson’s proteges – part of a small group of young traders at Tiger Management, known as the “Tiger Cubs.” Robertson mentored them. They followed in his footsteps. 

Burton: I think it was what Julian taught them about picking stocks and what he taught them about risk also, which is kind of ironic given what happened to Bill afterwards... But he really told them to pick the best companies, the best managements, and those you would go long. And the worst companies with the worst managements were the ones that you were going to go short. And he did tell them, when you really had conviction, to really lean into those positions.

Gura: Robertson gave Hwang money to start Tiger Asia, and Kathy says that firm’s success made Hwang a big deal on Wall Street in his own right. 

Burton: People really respected him, and then he had a little run in with the authorities in both Asia and in the US.

Gura: Tiger Asia pleaded guilty to wire fraud. And Hwang settled civil charges of insider trading, without admitting fault. 

Natarajan: This is a big setback, right? His hedge fund admitted wire fraud. He settled civil claims with the SEC. Has to return all the outside investor money. That's a big setback for anyone. You have to assume if you've been in the industry, you've had a reasonable amount of success and you have this kind of setback, that is it. You walk away from it. But Bill gets a second chance. Mostly by virtue of the fact that he still had some money left, allows him to start his family office.

Gura: Family offices invest the money of one person or one family. Unlike hedge funds, they can’t invest money on behalf of other clients, and they’re not subject to the same regulations, or disclosure rules. Big families, like the DuPonts and the Rockefellers, have them. Hwang called his Archegos Capital Management. Archegos is Greek. It means "prince or leader." But Bloomberg’s Kathy Burton says it also has another connotation:

Burton: It's often a word that people use for Jesus Christ.

Gura: Throughout his career, Hwang has poured part of the proceeds from his investments into ​​the Grace & Mercy Foundation, that’s a Christian charity he started in 2006. On its website, Grace & Mercy describes itself as a private grant-making foundation “focused on supporting the poor and oppressed… and helping people learn, grow and serve.” Sri says it also promotes public reading of the Bible, something near and dear to Hwang, who is known as a “Christian capitalist,” known for quoting scripture in meetings: 

Bill Hwang: Jesus says I'm the bread of life. If you come to me, you will never be hungry again. 

Hwang: Your people will be my people and your God will be my God.

Hwang: My company does a little bit of our part bringing a fair price to Google’s stock price… is it important to God, absolutely.

Gura: Kathy and Sri say Hwang’s religious conviction made him extremely comfortable with risk: 

Natarajan: You move into this part where you make these highly concentrated bets, You are talking about your top 10 investments were in some of these names, 50, 60, 70% of the overall holdings in that name is just this one person, not one giant firm with hundreds of institutional investors, one person having such an outsize influence. That in some ways is scary. Clearly he wasn't scared by it. Clearly he wasn't awed by it. When it comes to his investing style, I think it would not be wrong to say he almost operated with the flair of a reckless gambler.

Gura: Sri says, for a long time, that risk-taking paid off. Hwang made tens of billions of dollars in the stock market with highly leveraged bets. 

Natarajan: He goes to the bank and says here. I will put up some money. You give me some leverage. You go out and buy that stock.

Gura: Hwang did this, most notably, with ViacomCBS. He’d borrow money from a bank, and that bank bought the shares. 

Natarajan: It will come under your name. If the price goes up I get the money if the price goes down, you get the money I will pay you money.

Gura: And there was no public record of Hwang actually doing this. Hwang was making deals like this at several different banks, to the tune of billions of dollars, but none of them knew the scope and scale of Hwang’s investments. 

Natarajan: it meant a lot of lucrative fees, which is why they were willing to do business with him, which is why they saw him as a prized client. 

Gura: By going around to a bunch of different lenders and making these kinds of deals, Hwang was able to amass bigger and bigger positions in companies he believed in, which … drove up their stock prices, and he turned $200 million into more than $36 billion. Because of the way these transactions were structured, and because family offices aren’t subject to very stringent disclosure rules, Sri says Hwang was able to take on extremely large stakes in public companies under the radar.

Natarajan: If you're going out there in open market, buying the stock straight up, you can't hold more than 5%. Well, you can hold more than 5%, but you have to disclose that.

Gura: But because of his situation, Hwang became, effectively, ViacomCBS’s single-largest shareholder, without setting off any alarm bells. So long as the stock prices kept rising, Hwang kept making money. So did the banks, and the companies he invested in saw their share prices skyrocket … because of Hwang’s investments. But Kathy says that changed in March of 2021, when there was a problem with ViacomCBS.

Burton: Their price was going up so much, because of Bill, but they didn't know that, that they decided to do a secondary offering in the stock. That's usually, usually something that depresses the price of the stock, because there's more, more supply. And the bankers thought, oh, well there are these, you know, the stock keeps going up, there's people ready to buy. And so we can definitely do that. We can definitely sell that.

Gura: The problem was… they couldn’t. They didn’t know Hwang was responsible for the bulk of the buying. ViacomCBS’s stock price started to crater.

Burton: And that really started the panic.

Gura: The banks went to Hwang and said, basically, “Hey, the stock price is going down, and you need to pay us.” He couldn’t, and Archegos imploded. Over the course of a week, Hwang’s fortune vanished. It went from more than $36 billion ... to practically nothing. And the shockwaves from his firm’s collapse rocked global markets. Nomura and Morgan Stanley were among the hardest hit, but Credit Suisse lost the most – more than $5.5 billion. In the aftermath, Thomas Gottstein, that bank’s CEO, went on Bloomberg TV to explain what happened:

Thomas Gottstein: Archegos was a situation that is now being reviewed also by US regulators. It was a very idiosyncratic situation with a family office, which had some deficiencies in terms of disclosure. So it was certainly not only a Credit Suisse issue, but we certainly had higher exposures than others. 

Gura: Ultimately, that “idiosyncratic situation” contributed to the end of that storied Swiss bank.

Natarajan: Two years later, Credit Suisse doesn't exist. The cause of death for Credit Suisse may not be listed as Archegos, but it certainly played a big role in that. 

Gura: And prosecutors have resolved to hold Bill Hwang to account. Sri says the Justice Department unsealed a string of charges against him in 2022, including… 

Natarajan: Market manipulation, wire fraud, racketeering. Racketeering! Those were charges put in place originally to take down mob bosses. 

Gura: The start of Bill Hwang’s trial… and what’s at stake for Wall Street, is after the break.

Gura: Bill Hwang’s trial is expected to last six to seven weeks. The US government has charged Hwang with 11 criminal counts. Damian Williams, the US Attorney for the Southern District of New York, spoke to reporters about the case in April of 2022: 

Damian Williams: Today we unseal racketeering, conspiracy, securities fraud, wire fraud, and margin manipulation charges against Bill Hwang, the founder of Archegos Capital Management. This scheme was historic in scope. 

Natarajan: The U. S. Attorney for the Southern District is not wrong when he says this is a historic case, right?

Gura: That’s Bloomberg reporter Sridhar Natarajan. Sri says the prosecution will argue that Hwang hid the size of his investments in his quest to drive share prices higher. He side-stepped limits banks ordinarily have in place. 

Natarajan: He was butting up against those limits. He would reassure those banks saying, don't worry, I don't have similar positions elsewhere. Prosecutors say that was a lie. Now that we know the portfolio, and if he actually said that, or his team said that, that would have been a lie.

Gura: Sri says something else prosecutors have seized on is Hwang’s argument that, if he needed to liquidate a position – to sell some of that stock quickly, he could.

Natarajan: You look at the fact that he also said, don't worry, I can also get out of these trades easily without overwhelming the markets. Prosecutors say. Also a lie. Because of the size of the positions he'd built, to get out in that time frame would have meant flooding the market with those securities, which would have led to major adverse price action. 

Gura: Selling all those shares all of a sudden, would have driven stock prices down dramatically, which is what played out with ViacomCBS, whose stock lost more than half its value as Archegos imploded. Kathy and Sri have been looking into what Hwang has been up to, as he awaits trial. Since he was indicted, two years ago, Hwang has become even more invested in his religious charity, The Grace and Mercy Foundation, which, Sri says, has seen its assets grow in recent years. Which is pretty extraordinary. 

Natarajan: So if that 530 million in assets became 700, 800 million, you'd actually be calling one of the better performing hedge funds.

Gura: Turns out, it's become a lifeboat for some of the men and women Hwang worked with at Archegos, who lost their jobs. Many of them are now making more than half a million dollars each at Grace & Mercy. 

Burton: As Archegos was unwinding, Bill was sort of focusing more and more on the foundation. He’s giving his people a place to work. He is continuing his works with the scripture reading, and that’s where he’s been spending a lot of his time – and also preparing for his trial, since the Archegos collapse. 

Natarajan: A former employee has alleged, you know, this in some ways were supposed to be golden handcuffs. You triage your legal risk and make sure that these people stay on your side and don't go out there against you. 

Gura: It raises more questions about Hwang’s motivations. Questions we could get answers to, Kathy says, during the trial. 

Burton: What was his exit strategy? Did he think at some point everyone would come in and say, oh wow, these companies, we really want them, so we're gonna take them off your hands. It makes no sense to me, and there's no apparent exit strategy for him. So I just wanna know what he was thinking.

Gura: Kathy and Sri tried to ask Hwang about that directly, when they sat with him around that Costco table on that visit to his house in New Jersey, where they found him listening to a Christian audiobook.

Burton: He was very polite. He'd offered us chair, he brought us water, and then he, at the end of the conversation, he politely asked us never to return.

Gura: The trial will fill in some gaps about what Bill Hwang did, but it could also affect how firms like Archegos operate and are regulated. There are thousands of them in the US.

Gura: Am I right to assume that this is a trial that will be closely watched by the heads of hedge funds and family offices? And if so, what are they going to be watching for?

Burton: I think the family offices is particularly interesting because they, it is an area that has had less regulation. And I think in the wake of this, definitely the SEC has looked at that and proposed things. So far, nothing has happened. But I think that family offices are still concerned that they might have to do more reporting.

Natarajan: Will there be more disclosure requirements? Will there be a way to figure out that something like this cannot be repeated? That's where they will closely watch with a lot of, you know, professional nervousness, if you may.

Gura: This trial is also … an opportunity to learn more about how some of the world’s biggest banks could have been blind to the full extent of what Hwang was doing, and how they were left holding the bag. 

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