Tiger Asia Asks H.K. Court to Dismiss Suit
Tiger Asia Management LLC, the hedge- fund firm led by Bill Hwang, asked a Hong Kong judge to dismiss a regulator’s suit to ban it from trading in the city and to restore alleged insider trading profits to investors.
“It is not appropriate for a civil court to determine what is essentially a criminal offense,” said Charles Sussex, a lawyer for the New York-based hedge fund manager, in Hong Kong’s Court of First Instance today.
Hong Kong’s Securities and Futures Commission alleged Tiger Asia engaged in insider trading, and is seeking a court order to freeze assets valued at HK$38.5 million ($4.9 million) held by Tiger Asia, Hwang and officers Raymond Park and William Tomita. The regulator has asked for an order to ban the fund from trading in Hong Kong securities.
“This is a blatant case of insider dealing that happened on more than one occasion by the same outfit,” said Simon Westbrook, a lawyer for the regulator, known as the SFC. “Unfortunately all of the defendants are based in New York. None of them are within the jurisdiction.”
Hedge funds have come under the scrutiny of regulators worldwide following the collapse in 2008 of Lehman Brothers Holdings Inc. New York-based Galleon Group co-founder Raj Rajaratnam was convicted May 11 in the U.S. in the biggest insider-trading prosecution in a generation.
Short Sales
Tiger Asia and the three officers sold short 93 million shares China Construction Bank Corp. (939), after having been approached to take part in the placement of the bank’s shares in January 2009, SFC said.
Shorting involves selling borrowed shares in a company with the expectation of buying them back at a lower price later.
In one instance, Tiger Asia closed the short positions by buying the placement shares on Jan. 7, 2009, at a price cheaper than the prevailing market price, reaping a HK$29.9 million profit, according to the SFC.
The regulator applied for a High Court injunction to freeze the assets, amounting to the gains the company and the officers allegedly made from dealing on inside information.
In denying wrongdoing in an October letter to clients, Tiger Asia disclosed receiving a subpoena from the U.S. Securities and Exchange Commission for trading records and other documents, and said it was cooperating with the U.S. regulator.
Fund Losses
Tiger Asia’s fund lost 16 percent this year through May 15, hurt by bets against Chinese stocks, a person with knowledge of the matter told Bloomberg last month.
Its assets declined to $1.3 billion in April from $3 billion at the end of September, the person said.
Hwang founded Tiger Asia in 2001. The New York-based company is one of the so-called Tiger Cubs, a group of hedge- fund managers either backed by Julian Robertson or worked at his Tiger Management LLC, which he founded in 1980 and built into one of the world’s largest hedge fund managers before returning clients’ money in 2000.
The SFC alleged Hwang made the trading decisions in both cases. Park is Tiger Asia’s head of trading, and Tomita supports trading activities, the SFC said.
All of Tiger Asia’s employees are based in New York, according to the SFC. The hedge fund manager, which has specialized in trading equities in China, Japan and South Korea since its inception in 2001, doesn’t have an office in Hong Kong, the regulator said.
The men could face criminal prosecution if they came to Hong Kong, Westbrook said today.
To contact the reporters on this story: Debra Mao in Hong Kong at dmao5@bloomberg.net; Bei Hu in Hong Kong at bhu5@bloomberg.net
To contact the editors responsible for this story: Douglas Wong at dwong19@bloomberg.net; Andreea Papuc at apapuc1@bloomberg.net
Rate this Page