After successfully obtaining orders under section 213 of the Securities and Futures Ordinance, the Securities and Futures Commission (“SFC”) has now commenced proceedings against Tiger Asia Management LLC (“Tiger Asia”) in the Market Misconduct Tribunal (“MMT”).
The SFC’s battle with Tiger Asia has been a long running one, primarily due to Tiger Asia’s challenge, through the Hong Kong courts, of the SFC’s use of section 213 without a prior MMT proceeding or criminal prosecution. That issue was resolved by the Court of Final Appeal in April of this year1 in favour of the SFC and now we will see the second round play out in the MMT. On 11 July 2013, the SFC commenced proceedings against Tiger Asia and three of its officers, Mr Bill Sung Kook Hwang, Mr Raymond Park and Mr William Tomita (“the Tiger Asia parties”). The proceedings relate to dealings in the securities of Bank of China and China Construction Bank Corporation in 2009.
In the statement filed with the MMT, the SFC alleges that the Tiger Asia parties contravened the insider dealing (s.270) and false trading (s.274) provisions of the Securities and Futures Ordinance. The allegation against the Tiger Asia parties is that they engaged in short selling in Bank of China and China Construction Bank stocks following receipt of confidential and price sensitive information obtained in relation to proposed placements in those stocks.
The SFC’s announcement (which can be found here) indicates that the MMT route was preferred to criminal proceedings to avoid the risk of double jeopardy following criminal convictions in the United States in relation to the same matter.
If the MMT finds the Tiger Asia parties have engaged in market misconduct it can make a range of orders, including prohibiting a person from trading in Hong Kong for up to five years. The SFC’s Notice does not indicate any suggested penalty. There is no indication yet of when a hearing may take place, but typically MMT matters take some time.