The MMT on 7 October 2014 made “cold shoulder orders” and “cease and desist orders” against New York-based asset management company, Tiger Asia, and Mr Hwang, pursuant to s.257(1)(b) and (c) of the Securities and Futures Ordinance (SFO). The effect of the orders was that both Tiger Asia and Mr Hwang have been banned from the date of the order from dealing in any securities in Hong Kong for 4 years (5 years being the maximum period that the MMT may order) and are bound not to engage in any form of market misconduct in the future.

Given that MMT proceedings are civil in nature, the MMT emphasized that the orders were not made by way of penalty, but for the purpose of protecting the integrity of the Hong Kong financial market.

The SFC did not pursue criminal proceedings because Tiger Asia and Mr Hwang had already reached a settlement with the US Department of Justice and Securities and Exchange Commission (SEC) with respect to certain criminal and administrative proceedings that raised an issue of possible double jeopardy. The SEC announcement in this regard can be accessed here.

In reaching its conclusions, the MMT found that Tiger Asia and Mr Hwang had engaged in market misconduct, namely, insider dealing and false trading (contrary to s.270(1)(e) and s.274(1)(b) of the SFO). It should be noted that the provisions in Hong Kong that prohibit insider dealing are triggered when a person deals in securities listed in Hong Kong when in possession of inside information. The fact that the person is located outside of Hong Kong and that the decision to deal was made overseas are irrelevant.

The SFC had previously obtained remedial orders from the Court of First Instance (CFI) in December 2013, pursuant to s.213 of the SFO, requiring Tiger Asia and Mr Hwang to provide financial restitution to 1,799 counterparties who had entered into transactions with Tiger Asia. The amount involved was over HK$45 million. The SFC announcement in this regard can be accessed here.

The conclusion of the MMT proceedings marks the end of this matter, which included a jurisdictional challenge by the Tiger Asia parties to the Hong Kong Court of Final Appeal (CFA) on whether the Court has free-standing power under s.213 of the SFO to grant orders over contravention, independent of any criminal or MMT finding of culpability (click here to see our e-bulletin summarizing the CFA judgment).

Factual Background

Briefly, Tiger Asia traded in shares of Bank of China and China Construction Bank Corporation between December 2008 and January 2009 when they were in possession of inside information. The information was provided on the basis of an express agreement to be wall crossed.

The nature and purpose of “wall crossing” was examined and the MMT stated that it is an important tool in ensuring the efficient operation of financial markets and it is one built on trust. In agreeing to be wall crossed, the MMT considered that a market practitioner accepts:

  • obligations of strict confidence in respect of the information passed to him, and
  • that he may not deal (or otherwise act) on the basis of the information given to him until that information has clearly moved into the public domain.


This case initially confirmed that legal avenues are available to the SFC under the SFO to seek effective remedial and protective orders against wrongdoers, even where they are based overseas. Assets in Hong Kong maybe frozen initially and later applied to compensate counterparties pursuant to orders of the CFI under s.213 of the SFO.

The MMT proceedings have demonstrated the SFC’s ability to obtain orders restraining wrongdoers from further dealing in any securities in Hong Kong for lengthy periods of time. In its response to the MMT decision, the SFC reiterated that it would “track down and take action against wrongdoers wherever in the world they may lurk”.

A copy of the MMT Report is available here.