Tiger Asia Management LLC, which admitted to using inside information to trade Chinese bank stocks, and two of its officers were ordered by the Hong Kong court to pay HK$45.3 million ($5.8 million) to investors that were affected by the trades.
The New York-based hedge-fund firm, Bill Hwang, and Raymond Park admitted to insider dealing and manipulation when they traded shares of Bank of China Ltd. and China Construction Bank Corp. in 2008 and 2009, Hong Kong’s Securities and Futures Commission said today in a statement.
The SFC first sued Tiger Asia in 2009 and the case was later delayed when the regulator’s legal power was challenged. The court ruled in April in SFC’s favor, confirming its ability to sue parties it suspects of market misconduct independently of a criminal prosecution or a civil inquiry.
The sum will be returned to about 1,800 investors in Hong Kong and overseas, who traded with Tiger Asia, according to the statement.
The regulator alleges Tiger Asia made HK$9.1 million ahead of a Dec. 31, 2008, placement of Bank of China shares and HK$32.1 million before a Jan. 7, 2009, placement of China Construction Bank stock. In both instances, the hedge fund short-sold shares in the companies after UBS AG employees alerted them to the placements.
In a short sale, a trader sells borrowed assets to bet on a decline, hoping to buy them back later and pocket the price difference.
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