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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. There's spent a lot

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Speaker 1: of action recently in the courts in New York City.

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Speaker 1: A former president is one defendant. The one time golden

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Speaker 1: Boy of Crypto was found guilty of fraud, and this

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Speaker 1: week another major trial gets under way. The defendant is

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Speaker 1: Bill Huang. He may not be as well known, but

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Speaker 1: the outcome of his case could have huge implications for

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Speaker 1: how Wall Street does business. Huang, a former hedge fund manager,

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Speaker 1: is accused of committing fraud and market manipulation on a

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Speaker 1: massive scale and contributed to the collapse of one of

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Speaker 1: the world's largest banks. Bloomberg Street. Ar Notturajan says, our

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Speaker 1: Kago's capital management imploded in just a matter of days.

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Speaker 2: We're talking about his investment firm that had net capital

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Speaker 2: of thirty six billion. That was the Tuesday of that week,

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Speaker 2: and by the end of the week practically zero.

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Speaker 1: Perhaps phaps no financier's fortune has disappeared so quickly. Quang's

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Speaker 1: company Arcagos went busted in twenty twenty one, and now

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Speaker 1: Huang is accused of committing securities fraud and wire fraud

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Speaker 1: along with racketeering. Eleven charges in total and if he's convicted,

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Speaker 1: Huang could go to prison for twenty years. He maintains

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Speaker 1: his innocence. Huang is not your typical hedge fund billionaire.

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Speaker 1: He's a devout Christian who has poured hundreds of millions

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Speaker 1: of dollars into a religious charity he started. Wang shies

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Speaker 1: away from the spotlight, but what really sets him apart

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Speaker 1: is his modest profile. Street Arnaut Rajahan and Bloomberg's Kathy

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Speaker 1: Burton have chronicled Bill Wang's career for years, and after

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Speaker 1: Archagos collapsed, Kathy and Sried drove Tohuang's house in New

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Speaker 1: Jersey with a request for comment.

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Speaker 3: We didn't think he would be there, and then we

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Speaker 3: walked up to his house and we were going to

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Speaker 3: put a handwritten note in the door, and we heard

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Speaker 3: a voice and there was Bill sitting on his porch

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Speaker 3: in a plastic chair from Costco at a plastic table,

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Speaker 3: sitting there like some normal suburban guy on his porch

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Speaker 3: and his Adida's flip flops.

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Speaker 1: That's where Wang has been holed up awaiting the start

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Speaker 1: of his trial, which is likely to be a blockbuster.

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Speaker 1: Today on the show The Rise and Fall of Bill Wang,

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Speaker 1: who he was how he made his money and lost it,

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Speaker 1: and Wi Wang's trial promises to be one of the

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Speaker 1: biggest and most interesting in the history of Wall Street.

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Speaker 1: This is the big take. I'm David Gurat. Bill Wong

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Speaker 1: made his name on Wall Street, but Bloomberg Street are not. Aurajan, says.

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Speaker 1: Wang's story starts half a world away.

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Speaker 2: So let's go all the way back to nineteen sixty four.

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Speaker 2: Son of a Korean pastor, lived in South Korea for

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Speaker 2: much of his early life, middle class family from whatever

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Speaker 2: we can gather out there.

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Speaker 1: When Wang was eighteen, his family moved from South Korea

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Speaker 1: to Las Vegas. He went to college at UCLA and

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Speaker 1: after graduation he got his first job in finance.

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Speaker 2: Didn't really break into one of those top rung Wall

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Speaker 2: Street shops, not the Wall Street elite, not the Goldmans

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Speaker 2: of the Morgan Stanleys, but got his break with something

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Speaker 2: called Hyundai Securities.

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Speaker 1: And while he was working there, Wang caught the attention

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Speaker 1: of the billionaire hedge fund manager Julian Robertson, the founder

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Speaker 1: of the firm Tiger Management.

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Speaker 3: Jillian was a huge, huge name. He was the stock

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Speaker 3: picking king and what stood out about Bill was that

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Speaker 3: he brought Julian all these ideas about South Korean stocks,

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Speaker 3: which Jullian didn't really have any expertise in.

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Speaker 1: Quang became one of Robertson's proteges, part of a small

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Speaker 1: group of young traders at Tiger Management known as the

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Speaker 1: Tiger Cubs. Robertson mentored them they followed in his footsteps.

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Speaker 3: I think it was what Julian taught them about picking

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Speaker 3: stocks and what he taught them about risk, so which

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Speaker 3: is kind of ironic given what happened to Bill afterwards.

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Speaker 3: But he really told them to pick the best companies,

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Speaker 3: the best management, and those you would go along. And

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Speaker 3: the worst companies were the worst managements were the ones

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Speaker 3: that you were going to go short. And he did

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Speaker 3: tell them when you really had conviction, to really lean

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Speaker 3: into those positions.

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Speaker 1: Robertson gave Wang money to start Tiger Asia, and Kathy

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Speaker 1: says that firm's success made Wang a big deal on

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Speaker 1: Wall Street in his own right.

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Speaker 3: People really respected him, and then he had a little

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Speaker 3: run in with the authorities in both Asia and in

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Speaker 3: the US.

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Speaker 1: Tiger Asia pleaded guilty to wire fraud, and Wang settled

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Speaker 1: civil charges of insider trading without admitting fault.

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Speaker 2: This is a big setback, right. His hedge fund admitted

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Speaker 2: wire fraud, he settled civil claims with the sec has

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Speaker 2: to return all day outside investor money. That's a big

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Speaker 2: setback for anyone. You have to if you've been in

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Speaker 2: the industry, you've had a reasonable amount of success, and

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Speaker 2: you have this kind of setback, that is it. You

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Speaker 2: walk away from it. But Bill gets a second chance,

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Speaker 2: mostly by virtue of the fact that he still had

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Speaker 2: some money left allows him to start his family office.

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Speaker 1: Family offices invest the money of one person or one family.

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Speaker 1: Unlike hedge funds, they can't invest money on behalf of

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Speaker 1: other clients, and they're not subject to the same regulations

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Speaker 1: or disclosure rules big families like the DuPonts and the

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Speaker 1: Rockefellers have them. Quang called his Archago's capital management Urkego's

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Speaker 1: his Greek it means prince or leader, but Bloomberg Kathy

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Speaker 1: Burton says it also has another connotation.

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Speaker 3: It's often a word that people use for Jesus Christ.

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Speaker 1: Throughout his career, Huang has poured part of the proceeds

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Speaker 1: from his investments into the Grace and Mercy Foundation, that's

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Speaker 1: a Christian charity. He started in two thousand and six.

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Speaker 1: On its website, Grace and Mercy describes itself as a

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Speaker 1: private grant making foundation focused on supporting the poor and

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Speaker 1: oppressed and helping people learn, grow and serve. Sri says.

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Speaker 1: It also promotes public reading of the Bible, something near

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Speaker 1: and deer to Quang, who is known as a Christian

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Speaker 1: capitalist known for quoting Scripture in meetings.

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Speaker 4: Jesus says, I'm the bread of life.

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Speaker 5: If you come to me, who'll never be hungry again.

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Speaker 1: Your people will be my people, and your God.

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Speaker 5: Will be my God.

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Speaker 2: My company does a little bit of our part bringing

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Speaker 2: the fair price.

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Speaker 5: To Google stock price.

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Speaker 2: Is it important to God?

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Speaker 5: Absolutely?

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Speaker 1: Kathy and sriese Huang's religious conviction made him extremely comfortable

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Speaker 1: with risk.

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Speaker 2: You move into the spot where you make these highly

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Speaker 2: concentrated bets. You are talking about your top ten investments,

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Speaker 2: where in some of these names, fifty sixty seventy percent

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Speaker 2: of the overall holdings that name is just this one person,

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Speaker 2: not one giant firm with hundreds of institutional investors, One

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Speaker 2: person having such an outsized influence that in some ways

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Speaker 2: is scary. Clearly he wasn't scared by it. Clearly he

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Speaker 2: wasn't odd by it. When it comes to his investing style.

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Speaker 2: I think it would not be wrong to say he

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Speaker 2: almost operated with the flare of a reckless gambler.

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Speaker 1: Three says for a long time that risk taking paid off.

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Speaker 1: Wong made tens of billions of dollars in the stock

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Speaker 1: market with highly leveraged bets.

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Speaker 2: Goes to the bank and says, here, I will put

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Speaker 2: up some money, you give me some leverage, you go

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Speaker 2: out and buy that stock.

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Speaker 1: Wong did this most notably with ViacomCBS. He'd borrow money

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Speaker 1: from a bank and that bank bought the shares.

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Speaker 2: It will come under your name. If the price goes up,

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Speaker 2: I get the money. If the price goes down, you

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Speaker 2: get the money. I will pay you money.

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Speaker 1: And there was no public record of Wang actually doing this.

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Speaker 1: Huang was making deals like this at several different banks

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Speaker 1: to the tune of billions of dollars, but none of

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Speaker 1: them knew the scope and the scale of Quang's investments.

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Speaker 2: It meant a lot of lucrative fees, which is why

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Speaker 2: they were willing to do business with them, which is

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Speaker 2: why they saw him as a prized client.

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Speaker 1: By going around to a bunch of different lenders and

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Speaker 1: making these kinds of deals, Huang was able to amass

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Speaker 1: bigger and bigger positions in companies he believed in, which

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Speaker 1: drove up their stock prices, and he turned two hundred

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Speaker 1: million dollars into more than thirty six billion. Because of

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Speaker 1: the way these transactions were structured, and because family offices

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Speaker 1: are not subject to very stringent disclosure rules, Teresa Swang

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Speaker 1: was able to take on extremely large stakes in public

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Speaker 1: companies under the radar.

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Speaker 2: If you're going out there in open market buying the

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Speaker 2: stock straight up, you can't hold more than five percent. Well,

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Speaker 2: you can hold more than five percent, but you have

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Speaker 2: to disclose that.

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Speaker 1: But because of his situation, Huang became effectively via commcbs's

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Speaker 1: single largest shareholder without setting off any alarm bells. So

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Speaker 1: long as the stock price has kept rising, Huang kept

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Speaker 1: making money, so did the banks, and the companies he

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Speaker 1: invested in saw their share prices skyrocket because of Wang's investments.

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Speaker 1: But Kathy says that changed in March of twenty twenty

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Speaker 1: one when there was a problem with ViacomCBS.

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Speaker 3: Their price was going up so much because of Bill,

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Speaker 3: but they didn't know that that they decided to do

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Speaker 3: a secondary offering in the stock. That's usually usually something

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Speaker 3: that depresses the price of the stock because there's more supply.

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Speaker 3: And the bankers thought, oh, well, there are these you know,

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Speaker 3: the stock keeps going up, there's people ready to buy,

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Speaker 3: and so we can definitely do that. We can definitely

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Speaker 3: sell that.

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Speaker 1: The problem was they couldn't. They didn't know Huang was

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Speaker 1: responsible for the bulk of the buying. ViacomCBS's stock price

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Speaker 1: started to crater.

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Speaker 3: And that really started the panic.

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Speaker 1: The banks went to Huang and said basically, hey, the

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Speaker 1: stock price is going down and you need to pay us.

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Speaker 1: He couldn't, and our Kegos imploded. Over the course of

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Speaker 1: a week, Huang's fortune vanished. It went from more than

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Speaker 1: thirty six billion dollars to practically nothing, and the shock

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Speaker 1: waves from his firm's collapse rocked global markets. No Mura

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Speaker 1: and Morgan Stanley were among the hardest hit, but Credit

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Speaker 1: Suite lost the most, more than five and a half

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Speaker 1: billion dollars. In the aftermath, Thomas Gottstein, the bank CEO,

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Speaker 1: went on Bloomberg TV to explain what happened.

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Speaker 4: Our Kagos was a situation that is now being reviewed

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Speaker 4: also by US regulators that it was a very syncratic

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Speaker 4: situation with a family office which had some deficiencies in

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Speaker 4: terms of disclosure. So it was certainly not only a

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Speaker 4: credit sweet issue, but we certainly had higher exposures than others.

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Speaker 1: Ultimately, that idiosyncratic situation contributed to the end of that

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Speaker 1: storied Swiss bank.

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Speaker 2: Two years later, Credit Swiz doesn't exist. The cause of

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Speaker 2: death for Credit Swiez may not be listed as archagoes,

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Speaker 2: but it certainly played a big role in that.

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Speaker 1: And prosecutors have resolved to hold Bilhuang to account three says.

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Speaker 1: The Justice Department unsealed a string of charges against him

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Speaker 1: in twenty twenty two, including.

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Speaker 2: Market manipulation, wire fraud, racketeering, racketeering. Those were charges put

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Speaker 2: in place originally to take down mob bosses.

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Speaker 1: The start of bil Wang's trial and what's at stake

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Speaker 1: for Wall Street is after the break bil Wang's trial,

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Speaker 1: it's expected to last six to seven weeks. The US

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Speaker 1: government has charged Twang with eleven criminal counts. Damian Williams,

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Speaker 1: the US Attorney for the Southern District of New York,

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Speaker 1: spoke to reporters about the king in April of twenty

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Speaker 1: twenty two.

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Speaker 5: Today, the UNCO racketeering and conspiracy Securities drawd buyer fraud

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Speaker 5: and marketing infomation charges against Kill Wong, the founder of

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Speaker 5: Our Chigo's Capital Management. This scheme was a historic scope.

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Speaker 2: The US Adney for the Sudden District is not wrong

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Speaker 2: when he says this is a historic case, right.

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Speaker 1: That's Bloomberg reporter Shridar Noturajan Sree says, the prosecution will

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Speaker 1: argue that Wang hid the size of his investments in

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Speaker 1: his quest to drive share prices higher. The side stepped

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Speaker 1: limits banks ordinarily have in place.

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Speaker 2: He was butting up against those limits. He would reassure

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Speaker 2: those banks saying, don't worry, I don't have similar positions elsewhere.

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Speaker 2: Prosecutors say that was a lie now that we know

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Speaker 2: the portfolio. If he actually said that, or as team

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Speaker 2: said that, that would have been a lie.

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Speaker 1: Sree says. Something else prosecutors have seized on is Swang's

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Speaker 1: argument that if he needed to liquidate a position to

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Speaker 1: sell some of that stock quickly, he could.

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Speaker 2: You look at the fact that he also said, don't worry,

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Speaker 2: I can also get out of these trades easily without

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Speaker 2: overwhelming the markets. Prosecutors say also lie because of the

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Speaker 2: size of the positions he'd built to get out in

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Speaker 2: that timeframe would have meant flooding the market with those securities,

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Speaker 2: which would have led to major adverse price action.

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Speaker 1: Selling all those shares all of a sudden would have

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Speaker 1: driven stock prices down dramatically, which is what played out

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Speaker 1: with ViacomCBS, whose stock lost more than half its value

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Speaker 1: as Our Chagos imploded. Kathy and three have been looking

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Speaker 1: into what Wang has been up to as he awaits trial.

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Speaker 1: Since he was indicted two years ago, Wang has become

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Speaker 1: even more invested in his religious charity, the Grace and

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Speaker 1: Mercy Foundation, which Three says has seen its assets grow

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Speaker 1: in recent years, which is pretty extraordinary.

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Speaker 2: So if that five hundred and thirty million in assets

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Speaker 2: became seven eight hundred million, you'd actually going on one

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Speaker 2: of the better performing hedge funds.

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Speaker 1: Turns out, it's become a lifeboat for some of the

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Speaker 1: men and women Huang worked with at Our Kagos who

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Speaker 1: lost their jobs. Many of them are now making more

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Speaker 1: than half a million dollars each at Grays and Mercy.

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Speaker 2: A former employee has alleged to this. In some ways,

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Speaker 2: we're supposed to be golden handcuffs, and you try os

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Speaker 2: your legal risk and make sure that these people stay

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Speaker 2: on your side and don't go out there against you.

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Speaker 1: It raises more questions about Huang's motivations, questions we could

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Speaker 1: get answers to. Kathy says during the trial, what was

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Speaker 1: his exit strategy?

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Speaker 3: Did you think at some point everyone would come in

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Speaker 3: and say, oh, wow, these companies, we really want them,

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Speaker 3: so we're going to take them off your hands. It

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Speaker 3: makes no sense to me, and there's no apparent exit

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Speaker 3: strategy for him, so I just want to know what

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Speaker 3: he was thinking.

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Speaker 1: Kathy and Sree tried to ask Huang about that directly

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Speaker 1: when they sat with him around that Costco table on

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Speaker 1: that visit to his house in New Jersey, where they

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Speaker 1: found him listening to a Christian audiobook.

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Speaker 2: He was very polite.

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Speaker 3: He'd offered us chair, he brought us water, and then

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Speaker 3: at the end of the conversation he politely asked us

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Speaker 3: never to return.

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Speaker 1: The trial will fill in some gaps about what Bill

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Speaker 1: Wong did, but it could also affect how firms like

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Speaker 1: our Chagos operate and are regulated. There are thousands of

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Speaker 1: them in the US. Am I right to assume that

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Speaker 1: this is a trial that will be closely watched by

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Speaker 1: the heads of hedge funds and family offices, and if so,

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Speaker 1: what are they going to be watching for.

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Speaker 3: I think that family offices is particularly interesting because it

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Speaker 3: is an area that has had less regulation, and I

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Speaker 3: think in the wake of this, definitely the SEC has

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Speaker 3: looked at that and proposed things. So far nothing has happened,

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Speaker 3: but I think that family offices are still concerned that

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Speaker 3: they might have to do more reporting.

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Speaker 2: Will there be more disclosure woyments, Will there be a

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Speaker 2: way to figure out that something like this cannot be repeated.

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Speaker 2: That's where they will closely watch with a lot of

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Speaker 2: you know, professional nervousness, if you met.

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Speaker 1: This trial is also an opportunity to learn more about

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Speaker 1: how some of the world's biggest banks could have been

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Speaker 1: blind to the full extent of what Quang was doing

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Speaker 1: and how they were left holding the bag. This is

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Speaker 1: the Big take from Bloomberg News. I'm David Gura. This

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Speaker 1: episode was produced by Alex Segura and David Fox. It

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Speaker 1: was edited by Stacy Vanick Smith and David Sheer. It

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Speaker 1: was mixed by Alex Sagura. It was fact checked by

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Speaker 1: Adriana Tapia. Our senior producers are Naomi Shaven and Kim Gittleson.

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Speaker 1: Our senior editor is Elizabeth Ponso. Nicole Beemster bor is

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Speaker 1: our executive producer. Sage Bauman is our Head of Podcasts.

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Speaker 1: Special thanks to Matt Goldman and Victoria Blackburn Danielle. Thanks

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Speaker 1: for listening. Please find FO and review The Big Take

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Speaker 1: wherever you listen to podcasts. It helps new listeners find

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Speaker 1: the show. We'll be back tomorrow