| April 30
April 30 Hong Kong's Court of Final Appeal has
abruptly dismissed a challenge to the powers of the city's
market regulator brought by hedge fund Tiger Asia, validating
the watchdog's use of civil courts in a stepped-up campaign
against financial misdeeds.
The U.S.-based fund was challenging whether the Securities
and Futures Commission (SFC) was legally empowered to sue it in
the civil courts if it had not been found guilty of any offence
in the city's criminal courts or at a market tribunal.
However, the court dismissed the fund's case on Tuesday
surprisingly quickly after hearing representations from the
fund's lawyers. The judges will provide their reasons at a later
The SFC had alleged the fund engaged in insider dealing in
the stocks of China Construction Bank Corp
and Bank of China Ltd in 2008
and 2009 but was unable to take criminal action against it or
its staff since they were all based outside of Hong Kong.
The regulator asked the civil courts to freeze some of the
fund's assets and ban it from trading in the city's financial
The case was seen as a major test of the scope of the SFC's
authority under section 213 of Hong Kong securities law, which
gives the regulator wide powers such as issuing restraining
orders and voiding contracts, but had been put to limited use
until recent years.
The regulator argues it is vital that it be able to use the
courts to obtain these types of remedies, given that so many
investors and companies in Hong Kong's markets are based
"The decision by the Court of Final Appeal vindicates our
position and our strategy in seeking remedial orders under
section 213," said the SFC's enforcement head, Mark Steward.
Tiger Asia admitted last December to charges brought by the
U.S. Securities and Exchange Commission (SEC) of wire fraud in
connection with the trades in the Chinese bank shares that the
SFC alleged were illegal.
The SEC also charged Tiger Asia's head trader, Raymond Park,
with insider trading. Park and the fund's founder Sung Kook Bill
Hwang agreed to settle the SEC's charges without admitting or
When the SFC first took its case against Tiger Asia to Hong
Kong's Court of First Instance in April 2010, it was rejected.
The judge ruled that the city's criminal courts or Market
Misconduct Tribunal first had to determine whether the fund had
committed any wrongdoing.
That was overturned last year in the Court of Appeal, and
Tuesday's ruling means that Tiger Asia can take the case no
The fund, which managed as much as $5 billion at its peak,
was spun off from fund guru Julian Robertson's Tiger Management,
one of the world's largest hedge funds in the late 1990s.
Robertson returned investor money in 2000 and focused on
investing his own earnings in funds managed by his protégées,
known on Wall Street as "Tiger Cubs".
Tiger Asia announced that it would return money to investors
by the end of last August because of the prolonged investigation
in Hong Kong.