Hong Kong regulator shows its claws in $45m ruling against Tiger Asia fund managers to compensate investors for insider trading
December 22, 2013 Leave a comment
December 20, 2013 6:41 pm
Hong Kong shows its claws in $45m ruling against Tiger Asia
By Paul J Davies in Hong Kong
Two US-based hedge fund managers have been ordered to pay HK$45m (US$5.8m) to compensate investors, having admitted to insider trading in Hong Kong after a fight to block the regulator from taking action against them.Tiger Asia and two of its senior managers, Bill Sung Kook Hwang and Raymond Park,lost a string of appeals in the past two years as they tried to stop the Securities and Futures Commission from using a civil court process to punish them.
The SFC used the civil court because it wanted to keep an option to pursue either a criminal case or a misconduct tribunal against them if they ever came to Hong Kong and allowed themselves to be arrested.
“Tiger Asia’s admissions of insider dealing and manipulation vindicate the SFC’s allegations made at the outset of these proceedings,” said Mark Steward, SFC head of enforcement.
It is the second court victory in a week for the SFC after Du Jun, a former Morgan Stanley banker convicted in 2009 of insider trading, was ordered to pay HK$24m to more than 290 investors in the first court ruling of its kind in the city.
Tiger Asia, set up by protégés of Julian Robertson, one of the world’s best-known hedge fund managers, was accused of insider trading in the shares of China Construction Bank and Bank of China in 2008 and 2009.
The case became a big test of the regulator’s powers to act against wrongdoing by people based outside of its jurisdiction. This was hugely important for the SFC because almost half of stock trading in Hong Kong is done by investors based offshore.
The regulator is also seeking an order from the Market Misconduct Tribunal to ban Tiger Asia and the two managers from trading in Hong Kong for up to five years.
A third manager at the fund, William Tomita, has been exonerated after the SFC accepted that he was a junior member of the team acting on instructions and was not knowingly involved in the misconduct.
Tiger Asia and the two managers have already paid the HK$45.3m into a court escrow account and the money will now be disbursed to about 1,800 investors who lost out from trading the stock of CCB and BoC with Tiger Asia.
“Investors are unable to detect, or avoid transacting with, wrongdoers in the market and so they are highly vulnerable to this kind of misconduct,” said Mr Steward. “It is right and fair that these transactions should be rescinded so that the 1,800 innocent investors may be put back, as closely as possible, to the positions they were in before the transactions took place.”
Tiger Asia and the two managers, who remain in the US, could not be reached for comment.
About bambooinnovator
Bamboo Innovator 