SFC Power to Sue Is for Investors’ Protection, Court Says
By Eleni Himaras – May 10, 2013 1:44 AM ET
Hong Kong’s securities regulator must be able to seek asset-freezing court orders to protect investors, the city’s top court said in rejecting Tiger Asia Management LLC’s claim such action can only be taken after a civil or criminal trial.
In such proceedings, the Securities and Futures Commission “acts not as a prosecutor in the general public interest but as protector of the collective interests of the persons dealing in the market,” Leonard Hoffmann today wrote on behalf of a five-judge panel in reasons for the Court of Final Appeal’s April 30 ruling.
Tiger Asia, which admitted in a U.S. settlement to illegally using inside information to trade Chinese bank stocks, challenged the SFC’s bid to freeze its assets valued at HK$38.5 million ($4.96 million) before it had a chance to defend itself at trial. The SFC had sought a declaration from a court under the city’s securities’ law that the New York hedge-fund firm had breached insider trading rules.
Such a declaration, followed by a criminal trial where the company was acquitted creates the danger of inconsistent decisions, Tiger Asia’s lawyer Anthony Grabiner said, according to the ruling.
“That is true. These things happen,” Hoffmann wrote. “A jury acquitted O.J. Simpson of the murder of his girlfriend but he was found liable in civil proceedings for wrongfully causing her death. Inconsistency is always a possibility.”
The case is Securities and Futures Commission and Tiger Asia Management LLC, Sung Kook Hwang Bill, Raymond Park, William Tomita, FACV10/11/12/13 2012 in the Hong Kong Court of Final Appeal.
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