Another hedge fund and hedge-fund manager have pled guilty to criminal fraud charges recently after prosecutors said they participated in insider trading of Chinese bank stocks. In addition to the criminal charges, the fund has also agreed to pay $44 million to settle a civil lawsuit brought by the U.S. Securities and Exchange Commission. It is still not entirely clear how this insider trading affected American investors, some of whom may live in Miami Beach.
The SEC first looked into the Tiger Asia hedge fund in 2010 after it allegedly made short sales of Chinese bank stocks between December 2008 and January 2009. The SEC said that this practice netted the fund $16,2 million in illicit profits.
It is not just the Americans who are investigating the hedge fund, however. In 2009, the Hong Kong Securities and Futures Commission accused the hedge fund of insider trading. The Hong Kong regulatory body said that the hedge fund, which doesn't have a presence in the Chinese territory, had illegally dealt with two Hong Kong-listed Chinese lenders.
Though the hedge fund has agreed to settle the civil lawsuit with the SEC, it does not admit to any wrongdoing. The man who runs the fund has merely said that he is happy to have the matter behind him, but that the fund only "regrets the actions for which it accepts responsibility."
The U.S. attorney who prosecuted this case has said that the hedge fund had been given confidential information several times, but chose to violate others' trust by using that information to make an illegal profit.
Source: The Wall Street Journal, "Fund Pleads Guilty to Wire-Fraud Charge," Chad Bray and Reed Albergotti, Dec. 12, 2012
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