UPDATE 1-Hong Kong's SFC advances in bid to ban Tiger Asia fund

Thu Feb 23, 2012 3:56am EST

By Rachel Armstrong and Nishant Kumar

Feb 23 (Reuters) - Hong Kong's Court of Appeal on Thursday overturned a decision the blocking the market regulator's attempt to freeze assets of New York-based hedge fund Tiger Asia and ban it from trading in the city.

The ruling marks a victory for the Securities and Futures Commission (SFC) which alleges the fund engaged in insider dealing. The case is seen as a major test of the regulator's ability to bring investors or companies based outside Hong Kong to book.

Tiger Asia has denied all allegations against it.

The three Court of Appeal judges set aside a ruling by a lower court that the SFC had no jurisdiction to freeze Tiger Asia's assets.

The SFC was appealing against a ruling issued in June when the Court of First Instance said it was for the city's criminal courts or Market Misconduct Tribunal to determine whether the fund had committed any wrongdoing.

The SFC wanted to impose the order as Tiger Asia and all of its executives are based outside of Hong Kong, making it hard to pursue criminal proceedings.

The appeal judges backed the SFC's interpretation of a section of Hong Kong's securities law which they argue provides them with an alternative non-criminal route to take action against market misconduct.

That section "provides much needed ammunition to the commission to protect investors", said Judge Robert Tang.

Tiger Asia's lawyers argued that the was case an "abuse" of the regulator's powers and that the law did not allow the regulator to take punitive action against market misconduct in this way.

The fund still has the option to take the case to Hong Kong's Final Court of Appeal.

The SFC first applied for the order in April 2010 following allegations that the fund and three executives -- founder Bill Hwang, head of trading Raymond Park, and trading support officer William Tomita -- had engaged in insider dealing in shares of China Construction Bank Corp and Bank of China Ltd in 2008 and 2009.

The SFC had alleged that Julian Robertson seeded-Tiger Asia was given advance notice by third parties of forthcoming share placements by Bank Of China and CCB and shorted shares in the stocks ahead of the placements being publicly announced.

An SFC spokesman said the regulator had no immediate comment to make on the case. Lawyers for Tiger Asia could not be reached for comment.

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