international hedge fund pleads guilty to wire fraud scheme and agrees to forfeit more than $16 million in illegal profits
FOR IMMEDIATE RELEASE
December 12, 2012
NEWARK, N.J. – Tiger Asia Management LLC, an international hedge fund management company, pleaded guilty today to a wire fraud scheme, U.S. Attorney Paul J. Fishman announced.
Company founder Sung Kook “Bill” Hwang, 48, of Tenafly, N.J., pleaded guilty on behalf of Tiger Asia Management before U.S. District Judge Stanley R. Chesler in Newark federal court to an Information charging the company with one count of wire fraud. 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.
“On more than one occasion, Tiger Asia was entrusted with confidential, non-public information about companies only to turn around and violate that trust by illegally trading millions of shares of the company’s stock for huge profits,” U.S. Attorney Fishman said. “This criminal activity by a hedge fund operator, one of the biggest in the world, is unacceptable. The investing public must be reassured that they are investing in markets that are operated fairly.”
“Manipulation of securities trading laws by large hedge funds places the uninformed individual investor at risk of great financial harm,” FBI Special Agent in Charge Michael B. Ward said. “This guilty plea and associated forfeiture action is designed to deter such illegal activity and reinforces the US Government's resolve in addressing such criminal action.”
Robert Khuzami, director of the SEC’s Division of Enforcement, said: “Hwang today learned the painful lesson that illegal trading offshore 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.”
According to documents filed in this case and statements made in court:
Tiger Asia Management (“Tiger Asia”) was founded by Bill Hwang in 2001 and was one of the so-called “Tiger Cubs,” a group of hedge funds that were spun off from Tiger Management Corp., which in the late 1990s was one of the largest hedge funds sponsors in the world. Tiger Asia managed two separate hedge funds, Tiger Asia Overseas Fund, Ltd. and Tiger Asia Fund, L.P., which specialized in Asian-trading equities. Through these funds, Tiger Asia at times managed more than $5 billion in assets.
On three separate occasions in December 2008 and January 2009, investment bankers contacted Tiger Asia and asked whether Tiger Asia was interested in purchasing shares of stock in one of two Chinese companies whose stock was traded on the Hong Kong Stock Exchange. Before providing further information to Tiger Asia concerning the companies or the terms of the proposed sales, however, the investment bankers first required that Tiger Asia agree to be “brought over the wall,” or “wall-crossed,” standard industry terms which meant that Tiger Asia was required to keep the information disclosed to it confidential and could not buy or sell stock based on the information.
On each of these three occasions, a Tiger Asia executive agreed to these restrictions and then violated the agreement. Almost immediately after receiving the confidential information, Tiger Asia used that information to trade millions of shares of stock in the companies at issue. By trading on this valuable, nonpublic information in violation of its agreements, Tiger Asia reaped more than $16 million in illicit profits.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward; special agents of the IRS – Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen; and the U.S. Securities and Exchange Commission’s Division of Enforcement in New York, under the direction of Robert Khuzami, for the investigation leading to today’s guilty plea and sentence.
The government is represented by Assistant U.S. Attorney Christopher J. Kelly of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Defense counsel: Lawrence S. Lustberg Esq., Newark, N.J.