King & Wood Mallesons

Asia-Pacific 100 position: 3

Section 213: the latest weapon in the SFC’s arsenal to fight misconduct

The saga of Tiger Asia has finally come to an end, with the Hong Kong Court of Final Appeal confirming that relief under section 213 is ‘free-standing’ and not contingent upon there being a finding of a contravention of the Ordinance. This provides the Securities and Futures Commission (SFC) with a powerful new tool to act ‘as protector of the collective interests of persons’ who have been injured by misconduct.

To summarise, the Tiger Asia proceedings arose from allegations made by the SFC of insider dealing by Tiger Asia Management LLC and three of its officers, a US-based hedge fund. In 2009, the SFC sought a number of orders against Tiger Asia including: freezing Tiger Asia’s assets, prohibiting Tiger Asia from trading and unwinding the alleged insider dealing transactions. Tiger Asia contested this, winning in the Court of First Instance (which held that it did not have jurisdiction to grant orders under s.213 unless and until there is a finding of market misconduct, by either the Market Misconduct Tribunal or the criminal courts). The SFC appealed and Tiger Asia lost in the Court of Appeal (which held that a court’s jurisdiction under s.213 was not contingent upon a finding of market misconduct). Earlier this month, the Court of Final Appeal (CFA), in Securities and Futures Commission v Tiger Asia Management LLC agreed with the Court of Appeal, thus confirming that the SFC could apply for court orders under s.213 without there first being a finding of market misconduct…

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