Tiger Asia Engaged in Insider Dealing, Hong Kong Regulator Says

Date: Friday, August 21, 2009
Author: Bei Hu, Bloomberg

Tiger Asia Management LLC, the New York-based hedge fund manager led by Bill Hwang, engaged in insider trading and market manipulation, said Hong Kong’s Securities and Futures Commission as it seeks to freeze assets.

The SFC applied for a Hong Kong High Court injunction to freeze up to HK$29.9 million ($3.9 million) in assets of Tiger Asia, Hwang and two other Tiger Asia officers, Raymond Park and William Tomita, the securities regulator said in a statement posted on its Web site today.

The amount is equivalent to the gains they made from trading shares of China Construction Bank Corp., the world’s third-largest bank by market value, on Jan. 6, just before Bank of America Corp. announced the sale of $2.8 billion worth of shares in the Chinese company, the SFC said.

Tiger Asia was approached by a placing agent before market opening on Jan. 6 to participate in the planned Bank of America placement of Construction Bank shares, the SFC said. Tiger Asia was informed of the size and discount range of the share offering, it said.

Tiger Asia and the three officers were aware of the confidential and price sensitive nature of the information. Tiger Asia short-sold 93 million Construction Bank shares on Jan. 6 before the public announcement of the placement.

It closed the short positions by buying the placement shares on Jan. 7 at a price cheaper than the prevailing market price, reaping the HK$29.9 million profit, SFC said.

A call to Hwang’s New York office outside business hours today wasn’t answered.

Tiger Asia also was accused of downward manipulation of Construction Bank shares on Jan. 6 at the time of the short sales, the SFC statement said.

The SFC is seeking final orders from the court to unwind the trades, it said in the statement. It is also seeking court approval to prevent Tiger Asia and the three officers from trading listed securities and derivatives in Hong Kong “in similar circumstances,” it said.

The court has yet to set a hearing date, the SFC said. The SFC had said in a court filing Aug. 5 it was seeking to freeze assets of Tiger Asia and the three officers. The statement today outlined details of the commission’s case.

To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net.