By Jody Godoy

NEW YORK (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 (NYSE:).