By Rachel Armstrong and Nishant Kumar
Feb 23 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
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
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
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