U.S. judge recuses himself from Archegos fraud case, citing wife's ties to banks

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NEW YORK, May 19 (Reuters) - Archegos Capital Management founder Bill Hwang will get a new judge for his U.S. fraud trial, after the judge assigned to the case recused himself on Thursday due to his wife's ties to banks that could have been caught in the investment firm's meltdown.

U.S. District Judge Andrew Carter said in a Manhattan federal court hearing that his wife is a lawyer for Bank of New York Mellon (BK.N) and used to work for JPMorgan Chase (JPM.N), and that he would have a conflict of interest if either bank were a victim of the alleged fraud.

Archegos, which had $36 billion in assets, collapsed last year when it was caught short on highly leveraged trades, leaving global banks with $10 billion in losses. Prosecutors say Hwang lied to banks to increase Archegos' credit lines. read more

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Hwang, who was arrested last month, pleaded not guilty to 11 counts including racketeering, market manipulation and fraud. His lawyer has said the case has "no factual or legal basis."

Prosecutor Andrew Thomas said at Thursday's hearing JPMorgan "does figure into the story" but did not say if the bank is considered a victim. Thomas said BNY is "not a lossholder" and does not figure in a "significant way."

JPMorgan declined to comment. BNY did not immediately respond to a request for comment.

Carter's decision came amid heightened attention by lawmakers and court reform advocates to judicial recusals due to conflicts. President Joe Biden last week signed into law a bill subjecting federal judges to tougher disclosure requirements for their financial holdings and stock trades. read more

Lawmakers introduced the legislation last October after the Wall Street Journal reported that more than 130 federal judges failed to recuse themselves from cases involving companies in which they or their family members owned stock.

Neither prosecutors nor Hwang's defense objected to Carter's recusal.

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Reporting by Luc Cohen in New York' editing by Chizu Nomiyama

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