Bill Hwang’s Tiger Asia Management LLC has pleaded guilty in a federal insider-trading case in New Jersey and is to pay more than USD60million to settle criminal and civil charges reported Fox News this week.
The criminal case alleges that Hwang traded millions of shares of stock from two Chinese banks between December 2008 and January 2009 in violation of confidential agreements. Tiger Asia Partners is also alleged to have engaged in the trading: both hedge funds, based in New York, specialized in Asia-traded equities.
Hwang pleaded guilty on Wednesday on behalf of Tiger Asia Management to one count of wire fraud. The firm was placed on one year’s probation. Hwang agreed to a five-year ban from the securities industry, with Ray Park, the firm’s head trader, agreeing to a three-year ban reported the New York Times.
The company said it regrets its actions. Authorities say that the firm made more than USD16million as a result of the illegal trading and must forfeit the money. A further USD44million is to be paid by the two firms as part of the settlement. US Attorney, Paul Fishman, was quoted as saying: “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. This criminal activity by a hedge fund operator, one of the biggest in the world, is unacceptable.” Added Robert Khuzami, director of the SEC’s Division of Enforcement: “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.”
Although hedge funds have continued to close in Asia this year, and total industry AUM continues to languish at around the USD128billion mark, performance has been strong. Thanks to a fourth straight month of gains, Asian hedge funds are on course to outperform the rest of the world reported Bloomberg News this week, with credit and stock investments having benefited from the US Federal Reserve’s commitment to maintain low interest rates.
The Eurekahedge Asian Hedge Fund Index is up 5.8 per cent through November: this compares to 4.39 per cent for the index tracking global hedge funds. Asia fixed income hedge funds are up an impressive 9.75 per cent YTD. Peter Douglas, principal of Singapore-based consultancy GFIA Pte, was quoted as saying: “Investors are looking for yield globally and fixed-income prices have moved exactly in the right direction,” adding that often at the very end of a credit cycle one gets the biggest rally. Among funds posting strong returns this year are credit hedge fund Serica Management Ltd, which returned 14 per cent through October, and Double Haven Capital, whose long/short credit strategy was up 18 per cent through November.
Sticking with GFIA Pte, the firm this week released GFIA Research Insights for November 2012, providing insights into October hedge fund performance reported Allaboutalpha.com. Focusing primarily on funds investing in Asia Pacific, key takeaways are that it is possible to earn alpha in Asia (not just market beta) and that fundamental bottom-up research, especially on small and mid-sized companies, is not to be underestimated. Funds with a bullish outlook on the markets gained in October: Singapore-based Akshayam Asia Fund, for example, which trades using bottom-up research, has generated solid returns of 14.3 per cent YTD, with 1.5 per cent of that coming in October when many of the fund’s long positions ticked up. Allaboutalpha reported that the firm was bullish on Korea, Indonesia, India and China. Hong Kong-based Elements Advisors, another market bull, generated a healthy 3.7 per cent in October. In Japan, small cap-focused funds did well, the Simplex J-Fund gaining 6.9 per cent.
Wells Fargo Global Fund Services announced this week the opening of an office in Hong Kong. Wells Fargo already has an existing office in the Central District, Hong Kong Island, from which Global Fund Services will operate. The platform provides traditional fund administration services, operational support, derivatives processing, bank debt processing and cash/collateral management to alternative investment firms. Celia Choh, head of Fund Services Asia said that the firm’s expanded local presence “is carefully integrated into our global platform, which leverages Wells Fargo’s market experience and expertise”.
Johnson Har is to head up the Hong Kong office. Har joined Wells Fargo as a Vice President in August this year from Custom House Global Fund Services. Wells Fargo Global Fund Services currently administers more than USD25billion in alternative fund assets.