Jefferies risk manager remembers red flags in Archegos trial
A Jefferies Financial Group risk manager wondered why her contact at Archegos seemed to be in such a rush to withdraw hundreds of millions of dollars in excess cash from its trading account.
“What’s the emergency? Why?” she remembered thinking.
“I wanted to understand and there seemed to be an urgency about the call,” Jennifer Miranda, a Jefferies managing director, testified about a March 24, 2021 call with Scott Becker, then the head of risk management at Archegos Capital Management.
What Miranda didn’t know was that Archegos was in the middle of a furious campaign of trading and moving cash around to try to meet a spate of margin calls just two days before it would implode. The spectacular failure, taking place in less than a week, caused $10 billion in losses to its counterparty banks, including Jefferies, Morgan Stanley and Nomura Holdings Inc. while contributing to the downfall of Credit Suisse Group AG.
Miranda took the stand Thursday in the criminal racketeering conspiracy and fraud trial of Bill Hwang, the founder of Archegos.
Miranda told jurors she’s worked at Jefferies for more than 10 years, managing risk and advising the bank on working with hedge funds, family offices and private equity firms that trade derivatives.
“My role is to protect the firm and give an independent opinion on credit,” she said.
Prosecutors claim Hwang and Patrick Halligan, the former chief financial officer of Archegos who’s also on trial in Manhattan federal court, led a scheme to manipulate share prices and defrauded counterparties by lying about the firm’s finances and portfolio.
Becker has pleaded guilty in the case and is cooperating with the government in hopes of avoiding prison. He’s set to testify as soon as Monday
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