Reported by Anthony Lin Senior Legal Editor

Here are the key takeaways from today’s testimony. Former Archegos risk management head Scott Becker took the stand for his third day as one of the prosecution’s star cooperating witnesses, and the defense got its first shot at cross-examining him.

• Becker continued to testify that he was directed to lie to banks about Archegos’ financial condition. The prosecution was allowed to introduce a March 25, 2021, Bloomberg chat message exchange in which Archegos Chief Financial Officer Patrick Halligan told him to “just deflect” on calls with banks about looming margin calls. According to Becker, Halligan also told him to say on the calls that he didn’t have access to the firm’s portfolio, its trade blotter or the total of the margin calls he was facing. “I had access to all three of those,” Becker testified. 
• Hwang’s lawyer, Barry Berke, stressed Becker’s limited direct contact with the boss. Becker acknowledged that he didn’t recall Hwang ever explicitly telling him to lie to banks but pointed out that the founder was on March 24, 2021, Zoom calls in which false talking points for counterparties were discussed. “The talking points discussed on that call were lies,” Becker says. “Mr. Hwang was on that call.” Berke also suggested that Hwang only gave Becker general guidance on portfolio secrecy and that Becker decided to lie. “You know the difference between keeping things confidential and telling lies, don’t you?” Berke asks.
• Berke suggested that Archegos’ secrecy about its portfolio was related to its fear of being targeted in a short squeeze by meme-stock investors who’d previously gone after Melvin Capital. He asked Becker if he recalled talking with his team about who the meme-stock crowd would “hammer next” after Melvin. “I may have said that,” Becker says. But the judge interrupted the exchange with this own question. “What do you mean by meme,” asked US District Judge Alvin Hellerstein. The 90-year-old judge, who previously announced to the court that he just became a great-grandfather, quizzed Becker about the meme-stock phenomenon. “Many of the securities that this group of investors had invested in were securities who typically, generally, by professional investors weren’t looked upon fondly, like Gamestop,” Becker explained. “But you don’t know why they were called memes,” Hellerstein pressed.

Read full report: https://www.bloomberg.com/news/live-blog/2024-05-22/archegos-trial-may-22