Five-year ban sought in Tiger Asia insider trading case

Regulator calls for 'cold shoulder' order on US hedge fund and top two executives at tribunal hearing, citing need to deter insider trading

PUBLISHED : Thursday, 08 May, 2014, 1:15am
UPDATED : Thursday, 08 May, 2014, 1:15am

The Securities and Futures Commission wants the Market Misconduct Tribunal to impose a "cold shoulder" order on US hedge fund Tiger Asia Management and its two senior executives that bans them from trading in the local market for five years, the tribunal heard yesterday.

The SFC sought the order against fund founder Bill Hwang Sung-kook and head of trading Raymond Park for their insider dealing committed in two Hong Kong-listed mainland banks in 2008 and 2009.

The pair's lawyer argued that the penalty was too harsh since the fund and its executives were ordered in December last year by the Court of First Instance to pay HK$45.27 million to the 1,800 investors who suffered from their insider dealing.

Tiger Asia also reached a US$60 million settlement deal with the US Securities and Exchange Commission in December 2012 for the same insider trading.

Senior counsel Peter Duncan, representing the hedge fund, Hwang and Park, yesterday said they should not be punished twice in Hong Kong.

"They have paid the money, they have learnt from the mistakes," Duncan said during the tribunal hearing chaired by Mr Justice Michael Hartmann.

Senior counsel Simon Westbrook, for the SFC, said a five-year cold shoulder order, which would be the maximum granted by the tribunal, would send a clear message to the public about the seriousness of the case.

Duncan argued that the parties would be unlikely to do the same thing again. Tiger Asia and the two executives had already admitted to insider dealing and manipulation to the tribunal. As such, yesterday's hearing was to determine the penalties.

The SFC started its legal action in 2009 against Tiger Asia, Hwang, Park and trader William Tomita for insider trading and market manipulation before separate share-placement announcements by Bank of China and of China Construction Bank in 2008 and 2009. In both cases, the investment bankers arranging the placement had invited Tiger Asia to buy the shares and gave it advance knowledge before public announcements.

Hwang and Park had admitted using the information to short-sell the shares and bought them back at lower prices after the deals were made public. The December payment orders excluded Tomita because he was only a junior staff member.

Tiger Asia was renamed Archegos Capital Management last year and became a family office by returning outside capital to investors. Tiger Asia was founded by Hwang in 2001.

The hearing continues.