Speaker 1: Bloomberg Audio Studios, podcasts, radio news. There's spent a lot
Speaker 1: of action recently in the courts in New York City.
Speaker 1: A former president is one defendant. The one time golden
Speaker 1: Boy of Crypto was found guilty of fraud, and this
Speaker 1: week another major trial gets under way. The defendant is
Speaker 1: Bill Huang. He may not be as well known, but
Speaker 1: the outcome of his case could have huge implications for
Speaker 1: how Wall Street does business. Huang, a former hedge fund manager,
Speaker 1: is accused of committing fraud and market manipulation on a
Speaker 1: massive scale and contributed to the collapse of one of
Speaker 1: the world's largest banks. Bloomberg Street. Ar Notturajan says, our
Speaker 1: Kago's capital management imploded in just a matter of days.
Speaker 2: We're talking about his investment firm that had net capital
Speaker 2: of thirty six billion. That was the Tuesday of that week,
Speaker 2: and by the end of the week practically zero.
Speaker 1: Perhaps phaps no financier's fortune has disappeared so quickly. Quang's
Speaker 1: company Arcagos went busted in twenty twenty one, and now
Speaker 1: Huang is accused of committing securities fraud and wire fraud
Speaker 1: along with racketeering. Eleven charges in total and if he's convicted,
Speaker 1: Huang could go to prison for twenty years. He maintains
Speaker 1: his innocence. Huang is not your typical hedge fund billionaire.
Speaker 1: He's a devout Christian who has poured hundreds of millions
Speaker 1: of dollars into a religious charity he started. Wang shies
Speaker 1: away from the spotlight, but what really sets him apart
Speaker 1: is his modest profile. Street Arnaut Rajahan and Bloomberg's Kathy
Speaker 1: Burton have chronicled Bill Wang's career for years, and after
Speaker 1: Archagos collapsed, Kathy and Sried drove Tohuang's house in New
Speaker 1: Jersey with a request for comment.
Speaker 3: We didn't think he would be there, and then we
Speaker 3: walked up to his house and we were going to
Speaker 3: put a handwritten note in the door, and we heard
Speaker 3: a voice and there was Bill sitting on his porch
Speaker 3: in a plastic chair from Costco at a plastic table,
Speaker 3: sitting there like some normal suburban guy on his porch
Speaker 3: and his Adida's flip flops.
Speaker 1: That's where Wang has been holed up awaiting the start
Speaker 1: of his trial, which is likely to be a blockbuster.
Speaker 1: Today on the show The Rise and Fall of Bill Wang,
Speaker 1: who he was how he made his money and lost it,
Speaker 1: and Wi Wang's trial promises to be one of the
Speaker 1: biggest and most interesting in the history of Wall Street.
Speaker 1: This is the big take. I'm David Gurat. Bill Wong
Speaker 1: made his name on Wall Street, but Bloomberg Street are not. Aurajan, says.
Speaker 1: Wang's story starts half a world away.
Speaker 2: So let's go all the way back to nineteen sixty four.
Speaker 2: Son of a Korean pastor, lived in South Korea for
Speaker 2: much of his early life, middle class family from whatever
Speaker 2: we can gather out there.
Speaker 1: When Wang was eighteen, his family moved from South Korea
Speaker 1: to Las Vegas. He went to college at UCLA and
Speaker 1: after graduation he got his first job in finance.
Speaker 2: Didn't really break into one of those top rung Wall
Speaker 2: Street shops, not the Wall Street elite, not the Goldmans
Speaker 2: of the Morgan Stanleys, but got his break with something
Speaker 2: called Hyundai Securities.
Speaker 1: And while he was working there, Wang caught the attention
Speaker 1: of the billionaire hedge fund manager Julian Robertson, the founder
Speaker 1: of the firm Tiger Management.
Speaker 3: Jillian was a huge, huge name. He was the stock
Speaker 3: picking king and what stood out about Bill was that
Speaker 3: he brought Julian all these ideas about South Korean stocks,
Speaker 3: which Jullian didn't really have any expertise in.
Speaker 1: Quang became one of Robertson's proteges, part of a small
Speaker 1: group of young traders at Tiger Management known as the
Speaker 1: Tiger Cubs. Robertson mentored them they followed in his footsteps.
Speaker 3: I think it was what Julian taught them about picking
Speaker 3: stocks and what he taught them about risk, so which
Speaker 3: is kind of ironic given what happened to Bill afterwards.
Speaker 3: But he really told them to pick the best companies,
Speaker 3: the best management, and those you would go along. And
Speaker 3: the worst companies were the worst managements were the ones
Speaker 3: that you were going to go short. And he did
Speaker 3: tell them when you really had conviction, to really lean
Speaker 3: into those positions.
Speaker 1: Robertson gave Wang money to start Tiger Asia, and Kathy
Speaker 1: says that firm's success made Wang a big deal on
Speaker 1: Wall Street in his own right.
Speaker 3: People really respected him, and then he had a little
Speaker 3: run in with the authorities in both Asia and in
Speaker 3: the US.
Speaker 1: Tiger Asia pleaded guilty to wire fraud, and Wang settled
Speaker 1: civil charges of insider trading without admitting fault.
Speaker 2: This is a big setback, right. His hedge fund admitted
Speaker 2: wire fraud, he settled civil claims with the sec has
Speaker 2: to return all day outside investor money. That's a big
Speaker 2: setback for anyone. You have to if you've been in
Speaker 2: the industry, you've had a reasonable amount of success, and
Speaker 2: you have this kind of setback, that is it. You
Speaker 2: walk away from it. But Bill gets a second chance,
Speaker 2: mostly by virtue of the fact that he still had
Speaker 2: some money left allows him to start his family office.
Speaker 1: Family offices invest the money of one person or one family.
Speaker 1: Unlike hedge funds, they can't invest money on behalf of
Speaker 1: other clients, and they're not subject to the same regulations
Speaker 1: or disclosure rules big families like the DuPonts and the
Speaker 1: Rockefellers have them. Quang called his Archago's capital management Urkego's
Speaker 1: his Greek it means prince or leader, but Bloomberg Kathy
Speaker 1: Burton says it also has another connotation.
Speaker 3: It's often a word that people use for Jesus Christ.
Speaker 1: Throughout his career, Huang has poured part of the proceeds
Speaker 1: from his investments into the Grace and Mercy Foundation, that's
Speaker 1: a Christian charity. He started in two thousand and six.
Speaker 1: On its website, Grace and Mercy describes itself as a
Speaker 1: private grant making foundation focused on supporting the poor and
Speaker 1: oppressed and helping people learn, grow and serve. Sri says.
Speaker 1: It also promotes public reading of the Bible, something near
Speaker 1: and deer to Quang, who is known as a Christian
Speaker 1: capitalist known for quoting Scripture in meetings.
Speaker 4: Jesus says, I'm the bread of life.
Speaker 5: If you come to me, who'll never be hungry again.
Speaker 1: Your people will be my people, and your God.
Speaker 5: Will be my God.
Speaker 2: My company does a little bit of our part bringing
Speaker 2: the fair price.
Speaker 5: To Google stock price.
Speaker 2: Is it important to God?
Speaker 5: Absolutely?
Speaker 1: Kathy and sriese Huang's religious conviction made him extremely comfortable
Speaker 1: with risk.
Speaker 2: You move into the spot where you make these highly
Speaker 2: concentrated bets. You are talking about your top ten investments,
Speaker 2: where in some of these names, fifty sixty seventy percent
Speaker 2: of the overall holdings that name is just this one person,
Speaker 2: not one giant firm with hundreds of institutional investors, One
Speaker 2: person having such an outsized influence that in some ways
Speaker 2: is scary. Clearly he wasn't scared by it. Clearly he
Speaker 2: wasn't odd by it. When it comes to his investing style.
Speaker 2: I think it would not be wrong to say he
Speaker 2: almost operated with the flare of a reckless gambler.
Speaker 1: Three says for a long time that risk taking paid off.
Speaker 1: Wong made tens of billions of dollars in the stock
Speaker 1: market with highly leveraged bets.
Speaker 2: Goes to the bank and says, here, I will put
Speaker 2: up some money, you give me some leverage, you go
Speaker 2: out and buy that stock.
Speaker 1: Wong did this most notably with ViacomCBS. He'd borrow money
Speaker 1: from a bank and that bank bought the shares.
Speaker 2: It will come under your name. If the price goes up,
Speaker 2: I get the money. If the price goes down, you
Speaker 2: get the money. I will pay you money.
Speaker 1: And there was no public record of Wang actually doing this.
Speaker 1: Huang was making deals like this at several different banks
Speaker 1: to the tune of billions of dollars, but none of
Speaker 1: them knew the scope and the scale of Quang's investments.
Speaker 2: It meant a lot of lucrative fees, which is why
Speaker 2: they were willing to do business with them, which is
Speaker 2: why they saw him as a prized client.
Speaker 1: By going around to a bunch of different lenders and
Speaker 1: making these kinds of deals, Huang was able to amass
Speaker 1: bigger and bigger positions in companies he believed in, which
Speaker 1: drove up their stock prices, and he turned two hundred
Speaker 1: million dollars into more than thirty six billion. Because of
Speaker 1: the way these transactions were structured, and because family offices
Speaker 1: are not subject to very stringent disclosure rules, Teresa Swang
Speaker 1: was able to take on extremely large stakes in public
Speaker 1: companies under the radar.
Speaker 2: If you're going out there in open market buying the
Speaker 2: stock straight up, you can't hold more than five percent. Well,
Speaker 2: you can hold more than five percent, but you have
Speaker 2: to disclose that.
Speaker 1: But because of his situation, Huang became effectively via commcbs's
Speaker 1: single largest shareholder without setting off any alarm bells. So
Speaker 1: long as the stock price has kept rising, Huang kept
Speaker 1: making money, so did the banks, and the companies he
Speaker 1: invested in saw their share prices skyrocket because of Wang's investments.
Speaker 1: But Kathy says that changed in March of twenty twenty
Speaker 1: one when there was a problem with ViacomCBS.
Speaker 3: Their price was going up so much because of Bill,
Speaker 3: but they didn't know that that they decided to do
Speaker 3: a secondary offering in the stock. That's usually usually something
Speaker 3: that depresses the price of the stock because there's more supply.
Speaker 3: And the bankers thought, oh, well, there are these you know,
Speaker 3: the stock keeps going up, there's people ready to buy,
Speaker 3: and so we can definitely do that. We can definitely
Speaker 3: sell that.
Speaker 1: The problem was they couldn't. They didn't know Huang was
Speaker 1: responsible for the bulk of the buying. ViacomCBS's stock price
Speaker 1: started to crater.
Speaker 3: And that really started the panic.
Speaker 1: The banks went to Huang and said basically, hey, the
Speaker 1: stock price is going down and you need to pay us.
Speaker 1: He couldn't, and our Kegos imploded. Over the course of
Speaker 1: a week, Huang's fortune vanished. It went from more than
Speaker 1: thirty six billion dollars to practically nothing, and the shock
Speaker 1: waves from his firm's collapse rocked global markets. No Mura
Speaker 1: and Morgan Stanley were among the hardest hit, but Credit
Speaker 1: Suite lost the most, more than five and a half
Speaker 1: billion dollars. In the aftermath, Thomas Gottstein, the bank CEO,
Speaker 1: went on Bloomberg TV to explain what happened.
Speaker 4: Our Kagos was a situation that is now being reviewed
Speaker 4: also by US regulators that it was a very syncratic
Speaker 4: situation with a family office which had some deficiencies in
Speaker 4: terms of disclosure. So it was certainly not only a
Speaker 4: credit sweet issue, but we certainly had higher exposures than others.
Speaker 1: Ultimately, that idiosyncratic situation contributed to the end of that
Speaker 1: storied Swiss bank.
Speaker 2: Two years later, Credit Swiz doesn't exist. The cause of
Speaker 2: death for Credit Swiez may not be listed as archagoes,
Speaker 2: but it certainly played a big role in that.
Speaker 1: And prosecutors have resolved to hold Bilhuang to account three says.
Speaker 1: The Justice Department unsealed a string of charges against him
Speaker 1: in twenty twenty two, including.
Speaker 2: Market manipulation, wire fraud, racketeering, racketeering. Those were charges put
Speaker 2: in place originally to take down mob bosses.
Speaker 1: The start of bil Wang's trial and what's at stake
Speaker 1: for Wall Street is after the break bil Wang's trial,
Speaker 1: it's expected to last six to seven weeks. The US
Speaker 1: government has charged Twang with eleven criminal counts. Damian Williams,
Speaker 1: the US Attorney for the Southern District of New York,
Speaker 1: spoke to reporters about the king in April of twenty
Speaker 1: twenty two.
Speaker 5: Today, the UNCO racketeering and conspiracy Securities drawd buyer fraud
Speaker 5: and marketing infomation charges against Kill Wong, the founder of
Speaker 5: Our Chigo's Capital Management. This scheme was a historic scope.
Speaker 2: The US Adney for the Sudden District is not wrong
Speaker 2: when he says this is a historic case, right.
Speaker 1: That's Bloomberg reporter Shridar Noturajan Sree says, the prosecution will
Speaker 1: argue that Wang hid the size of his investments in
Speaker 1: his quest to drive share prices higher. The side stepped
Speaker 1: limits banks ordinarily have in place.
Speaker 2: He was butting up against those limits. He would reassure
Speaker 2: those banks saying, don't worry, I don't have similar positions elsewhere.
Speaker 2: Prosecutors say that was a lie now that we know
Speaker 2: the portfolio. If he actually said that, or as team
Speaker 2: said that, that would have been a lie.
Speaker 1: Sree says. Something else prosecutors have seized on is Swang's
Speaker 1: argument that if he needed to liquidate a position to
Speaker 1: sell some of that stock quickly, he could.
Speaker 2: You look at the fact that he also said, don't worry,
Speaker 2: I can also get out of these trades easily without
Speaker 2: overwhelming the markets. Prosecutors say also lie because of the
Speaker 2: size of the positions he'd built to get out in
Speaker 2: that timeframe would have meant flooding the market with those securities,
Speaker 2: which would have led to major adverse price action.
Speaker 1: Selling all those shares all of a sudden would have
Speaker 1: driven stock prices down dramatically, which is what played out
Speaker 1: with ViacomCBS, whose stock lost more than half its value
Speaker 1: as Our Chagos imploded. Kathy and three have been looking
Speaker 1: into what Wang has been up to as he awaits trial.
Speaker 1: Since he was indicted two years ago, Wang has become
Speaker 1: even more invested in his religious charity, the Grace and
Speaker 1: Mercy Foundation, which Three says has seen its assets grow
Speaker 1: in recent years, which is pretty extraordinary.
Speaker 2: So if that five hundred and thirty million in assets
Speaker 2: became seven eight hundred million, you'd actually going on one
Speaker 2: of the better performing hedge funds.
Speaker 1: Turns out, it's become a lifeboat for some of the
Speaker 1: men and women Huang worked with at Our Kagos who
Speaker 1: lost their jobs. Many of them are now making more
Speaker 1: than half a million dollars each at Grays and Mercy.
Speaker 2: A former employee has alleged to this. In some ways,
Speaker 2: we're supposed to be golden handcuffs, and you try os
Speaker 2: your legal risk and make sure that these people stay
Speaker 2: on your side and don't go out there against you.
Speaker 1: It raises more questions about Huang's motivations, questions we could
Speaker 1: get answers to. Kathy says during the trial, what was
Speaker 1: his exit strategy?
Speaker 3: Did you think at some point everyone would come in
Speaker 3: and say, oh, wow, these companies, we really want them,
Speaker 3: so we're going to take them off your hands. It
Speaker 3: makes no sense to me, and there's no apparent exit
Speaker 3: strategy for him, so I just want to know what
Speaker 3: he was thinking.
Speaker 1: Kathy and Sree tried to ask Huang about that directly
Speaker 1: when they sat with him around that Costco table on
Speaker 1: that visit to his house in New Jersey, where they
Speaker 1: found him listening to a Christian audiobook.
Speaker 2: He was very polite.
Speaker 3: He'd offered us chair, he brought us water, and then
Speaker 3: at the end of the conversation he politely asked us
Speaker 3: never to return.
Speaker 1: The trial will fill in some gaps about what Bill
Speaker 1: Wong did, but it could also affect how firms like
Speaker 1: our Chagos operate and are regulated. There are thousands of
Speaker 1: them in the US. Am I right to assume that
Speaker 1: this is a trial that will be closely watched by
Speaker 1: the heads of hedge funds and family offices, and if so,
Speaker 1: what are they going to be watching for.
Speaker 3: I think that family offices is particularly interesting because it
Speaker 3: is an area that has had less regulation, and I
Speaker 3: think in the wake of this, definitely the SEC has
Speaker 3: looked at that and proposed things. So far nothing has happened,
Speaker 3: but I think that family offices are still concerned that
Speaker 3: they might have to do more reporting.
Speaker 2: Will there be more disclosure woyments, Will there be a
Speaker 2: way to figure out that something like this cannot be repeated.
Speaker 2: That's where they will closely watch with a lot of
Speaker 2: you know, professional nervousness, if you met.
Speaker 1: This trial is also an opportunity to learn more about
Speaker 1: how some of the world's biggest banks could have been
Speaker 1: blind to the full extent of what Quang was doing
Speaker 1: and how they were left holding the bag. This is
Speaker 1: the Big take from Bloomberg News. I'm David Gura. This
Speaker 1: episode was produced by Alex Segura and David Fox. It
Speaker 1: was edited by Stacy Vanick Smith and David Sheer. It
Speaker 1: was mixed by Alex Sagura. It was fact checked by
Speaker 1: Adriana Tapia. Our senior producers are Naomi Shaven and Kim Gittleson.
Speaker 1: Our senior editor is Elizabeth Ponso. Nicole Beemster bor is
Speaker 1: our executive producer. Sage Bauman is our Head of Podcasts.
Speaker 1: Special thanks to Matt Goldman and Victoria Blackburn Danielle. Thanks
Speaker 1: for listening. Please find FO and review The Big Take
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Speaker 1: the show. We'll be back tomorrow