Hong Kong regulators have accused New York-based hedge fund Tiger Asia Management of insider-trading and market manipulation, moving to freeze some of the fund’s assets.
The Hong Kong Securities and Futures Commission says that Tiger received advanced word of a planned placement of China Construction Bank Corp. stock by Bank of America. The hedge fund was approached about participating in the placement, and did it ever, according to authorities. The SFC says Tiger shorted 93 million shares of the bank on Jan. 6, before the placement was announced, and proceeded to cover those shorts with shares it bought in the placement the following day.
What’s more, the SFC alleges that Tiger sought to depress the price of China Construction shares before covering its shorts. All told, regulators say the hedge fund earned HK$29.9 million (US$3.9 million) from the alleged illicit dealing.
At the time it was approached, Tiger was told of the size—US$2.8 billion—and discount range of Bank of America’s planned placement.
The SFC has asked a Hong Kong court to freeze HK$29.9 million in assets of Tiger, fund chief Bill Hwang and two other Tiger officers, Raymond Park and William Tomita. It is also seeking a court order unwinding the trades, as well as one barring the hedge fund from trades “in similar circumstances” in the future.