A Hong Kong court has rejected a Securities and Futures Commission bid to freeze HK$38.5 million worth in assets belonging to the US hedge fund Tiger Asia Management and its three executives, marking a setback for the financial markets watchdog.
High Court Judge Jonathan Harris concluded in a written judgement yesterday that his court did not have jurisdiction to determine whether the hedge fund and its three executives - its founder, Bill Hwang Sung-kook, managing director and head of trading Raymond Park, and trader William Tomita - had engaged in insider dealing or market manipulation, as alleged by the SFC. He said that a guilty verdict first had to be established by either the Market Misconduct Tribunal or a criminal court before he could grant a court order to freeze the money under section 213 of the Securities and Futures Ordinance.
Senior Counsel Simon Westbrook, representing the commission, had told the judge the SFC 'thought that this was a clear case of insider dealing that should be prosecuted, but as the defendants (Hwang, Park and Tomita) are in New York this was not possible'.
Judge Harris wrote: 'I would have thought any prospect of the three hedge fund managers passing through Hong Kong and risking prosecution is more than remote.'
Section 213 allows the SFC to apply for a court order to freeze defendants' money equal to the sum they are alleged to have earned from insider dealing or market manipulation to make sure money is available to compensate investors if they are found guilty.
The SFC has decided to appeal. 'The SFC challenges the correctness of this court decision and intends to appeal,' the commission said in a statement after the verdict.