Hong Kong Regulator Can’t Have Tiger Asia Banned

Jun 22 2011 | 9:30am ET

It’s official: Tiger Asia Management has won the first round in its battle against Hong Kong’s securities regulator, which accuses the hedge fund of insider trading.

A Hong Kong civil court judge yesterday ruled that it lacks jurisdiction over insider-trading rules. Justice Jonathan Harris told the Securities and Futures Commission that it would have to take the matter up with either a criminal court, as Tiger Asia had urged, or Hong Kong’s Market Misconduct Tribunal.

In a statement, the SFC said it could not do the former, as Tiger Asia and the three potential defendants, including founder Bill Hwang, are all in New York, and that it was loathe to do the latter, as that would grant them immunity from prosecution.

The SFC has accused Tiger Asia of insider-trading twice in less than a year. It had asked Harris to freeze some HK$38.5 million (US$5 million) in assets and to bar the firm and the three executives from trading in the special administrative region.

According to the SFC, Tiger Asia, on Hwang’s orders, made a pair of illegal trades after learning confidential information about two placements of Bank of China shares in late 2008 and early 2009. Those allegations followed 2009 charges that Tiger Asia had illegally traded shares of the China Construction Bank Corp.

The SFC said it would appeal Harris’ ruling, which came as no surprise: The judge last week all but said he would demur in a separate ruling on a different case.

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