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August 21, 2009

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Hedge fund taps insider info in share sale

A NEW York hedge fund headed by an ordained deacon used insider information to profit from Bank of America's plan to sell shares in a major Chinese mainland lender, Hong Kong regulators said yesterday, as they sought an injunction to freeze assets of the fund.

The hedge fund, Tiger Asia Management, was invited to be a buyer in BofA's sale of some of its shares in China Construction Bank in January, according to Hong Kong's Securities and Futures Commission.

Three Tiger Asia employees, aware the sale price was below the current market price, colluded to "sell short" 93 million Hong Kong-listed shares in the mainland bank ahead of the official announcement.

When BofA's sale was revealed the following day, Tiger Asia bought back the CCB stock at a lower price through the US bank's share sale, pocketing the difference in price, Hong Kong regulators said.

The three employees were identified as Bill Hwang, Tiger Asia's founder, managing director and head trader, Raymond Park and William Tomita. Hwang, an ordained deacon, serves on the board of trustees of a well-known seminary school in California called Fuller Theological Seminary, according to Fuller's Website.

Regulators have filed a petition in Hong Kong court seeking to freeze illicit gains of HK$29.9 million (US$3.9 million), as well as ban Tiger Asia and the three staff from certain trading activities.

A hearing on the petition is pending.


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