On 23 February 2012, Hong Kong's Court of Appeal overturned the Court of First Instance's decision to strike out proceedings against Tiger Asia Management LLC (Tiger Asia) and its officers (together the Tiger Asia Parties) and gave the Hong Kong Securities and Futures Commission (SFC) authority to pursue sanctions against Tiger Asia.
By way of background, the SFC commenced proceedings in August 2009 under section 213 of the Securities and Futures Ordinance (SFO) against the Tiger Asia Parties, seeking remedial orders and an injunction in relation to allegations that the Tiger Asia Parties had contravened certain insider dealing and market manipulation prohibitions under the SFO. Among other things, the SFC had for the first time sought orders to prohibit Tiger Asia from dealing in all listed securities and derivatives in Hong Kong. In the Court of First Instance, the Tiger Asia Parties argued that the court had no jurisdiction under section 213 to make findings that Tiger Asia had contravened the SFO without a pre-existing criminal conviction or determination by the Market Misconduct Tribunal (MMT). The SFC, however, argued that section 213 was a free-standing remedy, not subject to decisions by either the criminal courts or the MMT. The Court of First Instance ruled in favour of Tiger Asia. In overturning the decision, the Court of Appeal noted that section 213 "…provides valuable tools to the Commission to protect the investing public which is an important objective of the SFO…" and " …much needed ammunition to the Commission to protect investors."
The Court of Appeal's decision has significant ramifications as it substantially broadens the SFC's existing powers. Section 213 proceedings can now be commenced before and independent of any criminal or MMT proceedings against an alleged offender. The decision increases the options available to the SFC to obtain wide-ranging relief from the Court of First Instance, particularly in situations where an alleged offender is located overseas. This decision confirms that the SFC can bypass criminal or MMT proceedings and apply directly for section 213 orders which include relief against parties irrespective of their location (while retaining the option to bring a criminal prosecution at a later stage), and in doing so, creates a significant deterrent to those who contravene the SFO.
On 18 April 2012, the Court of Appeal granted leave for the Tiger Asia Parties to take their case to the Court of Final Appeal.