(Bloomberg) -- Two former Archegos Capital Management employees, one a senior executive and the other a junior staffer, described their different experiences of the family office’s March 2021 collapse at the trial of founder Bill Hwang.

Brian Jones, Archegos’ co-president, took the stand Wednesday as the third witness called by Manhattan federal prosecutors. Jones, a onetime Bear Stearns managing director, was head of research at Hwang’s firm. He said he first heard Archegos was in trouble the evening of March 24, 2021, while he was on vacation in Texas.

Executive chairman Andy Mills emailed Jones about how they were having difficulty meeting margin calls from Archegos’ counterparty banks. Mills said he was developing a liquidation strategy and praying the markets went up the next day.

“Otherwise, liquidation might be dire,” Mills wrote in the email. Jones is returning to the stand on Thursday.

Earlier on Wednesday, operations staffer Jesse Martz described the same sequence of events from a different perspective. A relatively junior staffer, Martz had little direct contact with Hwang and none with the banks that lost $10 billion trading with Archegos. But he saw the spreadsheets detailing the scale of Archegos’ losses. 

“Gonna be a bloodbath,” Martz wrote in a March 25, 2021, chat message shared with fellow Archegos operations team members that was shown to the jury.

Goldman Call

The two former employees’ testimony followed that of former UBS Group AG risk manager Bryan Fairbanks. UBS was one of the counterparties to whom Hwang and other senior Archegos staff allegedly lied about the firm’s positions, and Fairbanks recounted a series of calls with senior Archegos staff and eventually Hwang himself in which the scope of the disaster began to dawn on him.

Jones said he fielded a March 25, 2021, call from another of Archegos’ counterparties, Goldman Sachs Group Inc.

“They wanted to hear what the plan was for the day and to encourage Mr. Hwang to be active in selling everything he needed to in order to meet the margin call at the end of the day,” Jones said of Goldman. “They pointed out that fact that, at some point during the day, they didn’t feel the trading activity was on pace to meet the margin call they had extended.”

Most of Martz’s time on the stand was spent explaining spreadsheets and financial reports from that period. Using the leverage provided by the banks, Archegos had $36.3 billion in total assets that Hwang used to amassed a gross exposure of $163.5 billion at the end of Monday, March 22, 2021. By Friday it was gone. Soon after, Martz and other Archegos staffers were told to look for new jobs, he testified.

‘Intensity and Stress’

“There was a level of intensity and stress to it,” Martz told jurors about the firm’s final week. “A lot of activity and trading and volume and that made it stressful.”

Appearing nervous at times, Martz said that Archegos was a relatively easygoing place to work at first. Much of his job was processing trades and inputting the data that got turned into financial reports for Hwang and others. When he started at the firm in 2019, Martz recalled, Hwang made few trades, possibly once going a week without touching his portfolio.

By 2021, things were different. Early that year, Martz said, Hwang tightened restrictions on who at Archegos was allowed to access the detailed trading reports circulated by the operations team.

During his cross-examination of Martz, Hwang’s lawyer, Barry Berke, tried to suggest that Archegos tightened security in response to the meme-stock frenzy of early 2021. Martz responded that he couldn’t remember why the firm tightened security but said he and other Archegos staffers had discussed the meteoric rises of GameStop Corp. and other meme stocks.

In Archegos’ final week, Martz said he and the other members of the team were instructed not to act on the mounting and increasingly frantic margin calls from counterparty banks.

‘Well, Archegos Isn’t Around’

Martz said his salary in his last year at Archegos was $145,000, plus a $70,000 bonus. But 25% of his pay was withheld to be invested by Archegos, and the firm ended up owing him $40,000, he testified. Martz said he got $3,000 back after signing a release saying he wouldn’t sue for more.

Jones said he arrived back in New York late on March 25 and found a group in Mills’ office strategizing about how to deal with the counterparties.

“There was an attempt to get a standstill agreement together amongst the large banks,” Jones said. “There was a focus on discussions with the six largest counterparties banks, and an attempt to get them to essentially not act on their margin calls and to give Archegos more time to work through their positions and ultimately to, you know, meet the margin calls.”

Prosecutor Andrew Mark Thomas asked Jones how the issues resolved themselves.

“Well, Archegos isn’t around anymore,” Jones replied with a chuckle.

The jury is expected to hear from several other counterparty witnesses over the next several weeks, as well as former Archegos head trader William Tomita and risk management chief Scott Becker. The two, who have both pleaded guilty to crimes, are the prosecution’s star witnesses against Hwang and his co-defendant, former Archegos Chief Financial Officer Patrick Halligan.

The case is US v. Hwang, 22-cr-00240, US District Court, Southern District of New York (Manhattan). 

(Updates with testimony of Brian Jones.)

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