Good morning. The trial of Archegos Capital Management founder Bill Hwang began Monday with prosecutors telling a federal jury that the former fund manager manipulated markets and defrauded banks in the lead-up to the meltdown of his firm.

“Bill Hwang was a billionaire, but he risked nearly everything because he wanted more,” Assistant U.S. Attorney Alexandra Rothman said in a Manhattan courtroom. Archegos, she said, was a “house of cards built on manipulation and lies.”

• The background: Hwang’s firm used borrowed money and financial derivatives to trade heavily in a handful of tech and media stocks and help amplify its market footprint from about $10 billion to more than $160 billion over a yearlong period beginning in March 2020. Then, the share prices of some of Archegos’s biggest holdings began to falter, prompting a cycle of margin calls and stock sales that vaporized over $100 billion in market value within a few days.

• The charges: Archegos’s trades in companies including ViacomCBS, now known as Paramount Global, were timed and sized to maximize their market impact, prosecutors said. The firm used swaps to avoid disclosing the total size of positions, and to cause its lenders to buy additional shares as a hedge. To boost buying power, Hwang directed deputies to obtain more financing from banks by misleading them about the composition and riskiness of Archegos’s portfolio, prosecutors allege.

• The defense: Hwang’s attorneys have argued that Archegos’s trading practices and use of swaps were lawful and didn’t amount to manipulation. It was long Hwang’s style to invest in a small, concentrated number of stocks, and he thought ViacomCBS and other holdings were poised to benefit from the pandemic-induced boom in video-streaming and other digital technologies, his attorney Barry Berke told jurors Monday.

The trial may take as long as eight weeks.

Investment advisers face customer-vetting requirements.

U.S. regulators took another step on Monday toward bolstering anti-money-laundering safeguards with a proposal to require that certain investment advisers verify identities of their customers.

The proposal, which would extend identification requirements that already exist for broker-dealers and mutual funds, was issued jointly by the U.S. Securities and Exchange Commission and the U.S. Treasury Department’s Financial Crimes Enforcement Network.

PCAOB adopts tighter rules on auditors’ quality controls.

The Public Company Accounting Oversight Board is requiring audit firms to do more to ensure the quality of their work, a move aimed at improving the effectiveness of audits while updating decades-old rules.

The board Monday voted 4-1 to approve a rule to bolster the controls that guide how audit firms perform their audits.

• A little-known but powerful regulator has finalized sweeping new rules designed to expand the construction of big power lines and bring more renewable energy to U.S. homes and businesses.
   
• Major airlines are suing to block a new federal rule requiring upfront disclosure of add-on fees.

Investors crowd into soft-landing trade ahead of crucial inflation data.

Three straight months of hot inflation data dented Wall Street’s confidence that a series of interest-rate cuts is set to start at any minute. Investors are hoping the fourth time is the charm.

A mood of renewed optimism about a soft landing for the U.S. economy has swept across trading desks in the days ahead of Wednesday’s release of the consumer-price index. Federal Reserve Chair Jerome Powell kept hopes of rate cuts alive following the central bank’s latest policy meeting. Subsequent data showed easing pressure from job and wage growth, helping propel stocks back toward records.

• The forecast deficit for the platinum market has widened for 2024, as weak supply is outweighed by sustained demand from the automotive and industrial sectors.
   
• WuXi AppTec and its affiliates faced volatile trading after a U.S. bill was revised to give American companies time to decouple from Chinese biotech firms.

• Michael Cohen, the star witness in Donald Trump’s hush-money trial, told jurors Monday the then-presidential candidate directed him to make a payment to silence a porn star whose story he feared could derail his election bid.
   
• Sen. Bob Menendez is expected to delve into his penchant for hoarding gold bars, his wife’s alleged lies and his father’s suicide in a second public corruption trial.
   
• An Australian judge effectively lifted an order for social-media platform X to hide a video of the stabbing of a religious leader, which had drawn criticism from Elon Musk.
   
• Melinda French Gates, one of the most influential philanthropists in the world, is resigning from the foundation that she started with her ex-husband, Microsoft co-founder Bill Gates.

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