(Bloomberg) -- Archegos Capital Management returned to the spotlight three years after its spectacular collapse with the start of founder Bill Hwang’s trial on fraud, racketeering and market manipulation charges.

The trial kicked off Monday in Manhattan federal court with opening statements and continued through Thursday with testimony from several witnesses who experienced Archegos’ frantic final days in March 2021, an implosion that wiped out Hwang’s $36 billion fortune and cost some of Wall Street’s biggest names roughly $10 billion.

Hwang’s trial is expected to last about two months. Here are the key takeaways from week one.

“It Was All Lies”

Two witnesses from Archegos counterparties took the stand for the prosecution and offered bruising testimony about how Hwang and his top lieutenants misled them about his firm’s financial condition. “All the information they shared with us was lies,” said former UBS Group AG risk manager Bryan Fairbanks, the only witness on the stand for the first two days of trial. Both he and Jefferies Financial Group managing director Jennifer Miranda said Archegos executives said the firm had billions of dollars in ready cash and could unwind its positions quickly if necessary. Neither claim proved to be true.

Archegos’ Portfolio Was a Shock

Fairbanks testified that Archegos’ claims of ample liquidity were bolstered by its suggestion that it was heavily invested in big-name tech stocks like Apple Inc. and Google. So it came as a shock amid rising margin calls when Archegos head trader William Tomita revealed on a March 25, 2021, call that its biggest positions were in much less liquid companies like ViacomCBS, Discovery and Tencent Holdings. “My gut sunk,” Fairbanks testified, “because I knew UBS was going to take a very large loss.”

Hwang’s Reassurances Fell Flat

Hwang himself got on a March 25, 2021, call with Archegos’ six biggest counterparties and repeated the party line that he was “very confident” he could unwind the firm’s positions and make the banks whole in a few weeks. But by then it was too late. Fairbanks testified that the numbers Hwang shared on the call were “extremely alarming” and “implied that he lost more than 50% of his money that day alone.” The risk manager said the call confirmed what had been the bank’s “worst fear” — that Hwang had bet his entire fortune on a small group of stocks through a variety of banks, leaving them in the dark about the overlapping trades. 

Cooperating Witnesses Were Center Stage

Fairbanks described calls with Tomita as well as Scott Becker, Archegos’ former risk management head. Miranda said Becker was her primary contact at Archegos. Both Tomita and Becker have pleaded guilty to crimes and are expected to be the prosecution’s star witnesses against Hwang and his co-defendant, former Archegos Chief Financial Officer Patrick Halligan. Becker is expected to take the stand as soon as Monday. The counterparty witnesses testified that Tomita and Becker lied to them, setting up their testimony that Hwang and Halligan directed them to do so.

‘Gonna Be a Bloodbath’

Two former Archegos employees, one a senior executive and the other a junior staffer, described their different experiences of the family office’s collapse. Brian Jones, the co-president and head of research, described an email he got on the evening of March 24, 2021, while he was on vacation in Texas. Archegos executive chairman Andy Mills said he was developing a liquidation strategy to deal with margin calls and praying the markets went up the next day. “Otherwise, liquidation might be dire,” Mills wrote. Meanwhile, operations staffer Jesse Martz was watching the disaster unfold on internal spreadsheets. “Gonna be a bloodbath,” Martz wrote in March 25 chat message to other team members. 

Banks Knew Archegos Was Risky

The defense has been eager to suggest that banks accepted the risks of doing business with Archegos because they earned lucrative fees selling swaps to the family office. US District Judge Alvin Hellerstein has warned the defense against trying to blame the banks, but some testimony that emerged over the past week could be helpful to Hwang. Fairbanks said UBS took on Archegos as a client despite concerns about an insider trading case against Hwang’s previous hedge fund, Tiger Asia Management, and it increased his trading limit to $10 billion from $8 billion despite concerns about risk. Miranda said she was concerned about a March 24, 2021, request from Archegos to withdraw excess cash from its trading account, but but she partially approved the withdrawal and said the firm had never missed a margin call before. 

The case is US v. Hwang, 22-cr-00240, US District Court, Southern District of New York (Manhattan). 

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