It appears things can only get worse for Tiger Asia Management, whose executives don't seem to have heard of the expression 'once-bitten, twice shy', if new allegations are anything to go by.
Already the subject of insider-dealing allegations in Hong Kong, the New York-based asset manager may now win the dubious honour of becoming the first entity to be banned from trading in the territory by the Securities & Futures Commission (SFC).
The regulator is seeking court orders to prohibit Tiger Asia from dealing in all listed securities and derivatives in the territory in light of further insider-trading allegations.
This time the trades concern Bank of China (BOC) shares and come on top of proceedings the SFC started against Tiger Asia in August, in relation to the firm's dealings in China Construction Bank shares on January 6, 2009.
The SFC has amended the current proceedings against Tiger Asia and three of its senior officers -- Bill Sung Kook Hwang, Raymond Park and William Tomita -- to include the new allegations. The regulator is also seeking to freeze an additional amount of up to $8.6 million of the firm's assets, the notional profit it has allegedly made in the more recent trades.
This is on top of the $29.9 million the SFC applied to freeze when it first began proceedings in August against the Tiger Asia parties. The amount equates to the notional profit made by the firm in alleged insider-dealing and market-manipulation activities.
In the case concerning the BOC shares, the SFC alleges that Tiger Asia was given advance notice and was invited to participate in two placements of BOC shares by UBS and Royal Bank of Scotland on December 31, 2008 and January 13, 2009, respectively. The firm was provided with details of both placements after being told and agreeing the information was confidential and price-sensitive, and agreed not to deal in BOC shares after receiving the information, alleges the regulator.
Tiger Asia short-sold 104 million BOC shares before the placement by UBS, making a notional profit of $8.6 million, and sold 256 million BOC shares before the placement by RBS (of which 251 million shares were short sales), making a notional loss of around $10 million, alleges the SFC.
The regulator contends that these transactions constitute illegal insider trading.
The SFC is also seeking orders to unwind the trades if the court finds they contravened the Securities and Futures Ordinance and to restore affected counterparties to their pre-transaction positions. The amount of assets the SFC is seeking to freeze is to ensure that there are sufficient funds to satisfy any restoration orders that may be made.