The hedge fund Tiger Asia pled guilty in New Jersey to one count of wire fraud in connection with insider trading at the firm.
Company founder Sung Kook “Bill” Hwang, 48, of Tenafly, New Jersey entered the plea on on behalf of Tiger Asia Management before U.S. District Judge Stanley R. Chesler in Newark federal court.
Following the guilty plea, Judge Chesler sentenced Tiger Asia to one year of probation and ordered Tiger Asia to forfeit more than $16 million in criminal proceeds.
Also today, the Securities and Exchange Commission (SEC) charged Hwang with conducting a pair of trading schemes involving Chinese bank stocks and making $16.7 million in illicit profits.
He and his firms have agreed to pay $44 million to settle the SEC’s charges.
The SEC also charged Raymond Y.H. Park for his roles in both schemes as the head trader of the two hedge funds involved – Tiger Asia Fund and Tiger Asia Overseas Fund. Park, who lives in Riverdale, N.Y., also agreed to settle the SEC’s charges.
Park was represented by Steven Glaser of Skadden, Arps, Slate, Meagher & Flom in New York.
Hwang and his firms were represented before the SEC by Carmen Lawrence of Fried, Frank, Harris, Shriver & Jacobson in New York.
The firms were represented in the criminal matter by Lawrence Lustberg of Gibbons in Newark, New Jersey.
The SEC alleged Hwang, the founder and portfolio manager of Tiger Asia Management and Tiger Asia Partners, committed insider trading by short selling three Chinese bank stocks based on confidential information they received in private placement offerings.
Hwang and his advisory firms then covered the short positions with private placement shares purchased at a significant discount to the stocks’ market price.
They separately attempted to manipulate the prices of publicly traded Chinese bank stocks in which Hwang’s hedge funds had substantial short positions by placing losing trades in an attempt to lower the price of the stocks and increase the value of the short positions.
This enabled Hwang and Tiger Asia Management to illicitly collect higher management fees from investors.
“Hwang today learned the painful lesson that illegal offshore trading is not off-limits from U.S. law enforcement, and tomorrow’s would-be securities law violators would be well-advised to heed this warning,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.