Articles By Topic
By Topic: Asia
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From Vol. 6 No.13 (Mar. 28, 2013)
How Can Hedge Fund Managers Understand and Navigate the Perils of Insider Trading Regulation and Enforcement in Hong Kong and the People’s Republic of China
An old Chinese curse states: “May you live in interesting times.” This proverb is often coupled with a more severe curse: “May you come to the attention of those in authority.” For institutional investors trading in markets in Hong Kong and Mainland China (People’s Republic of China or PRC), these are indeed “interesting” regulatory times. More importantly, an evolving legal and regulatory landscape has significantly increased the likelihood that those traders who are not informed and careful in their research and trading on those markets shall eventually “come to the attention of those in authority.” For a further discussion of regulatory requirements governing establishing a hedge fund manager presence in Asia, see “Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part Four of Four),” The Hedge Fund Law Report, Vol. 5, No. 3 (Jan. 19, 2012). In a guest article, Michael A. Asaro and Douglas A. Rappaport, both partners at Akin Gump Strauss Hauer & Feld LLP, and Patrick M. Mott, an associate at Akin Gump, examine the provisions of Hong Kong and PRC insider trading law most important to U.S.-based hedge fund managers. For the sake of comparison, the authors also discuss the corresponding provisions of U.S. insider trading law. For a related discussion of U.S. and U.K. insider trading law, see “Perils Across the Pond: Understanding the Differences Between U.S. and U.K. Insider Trading Regulation,” The Hedge Fund Law Report, Vol. 5, No. 42 (Nov. 9, 2012). Importantly, in some instances, the insider trading laws in the PRC and Hong Kong may require hedge fund managers to proceed more cautiously than they would with regard to similarly-situated U.S. issuers. Given that corporate and IR executives in Hong Kong and the PRC may lack the training and vigilance of their U.S. counterparts, it is crucial that hedge fund managers understand the rules applicable to trading on selectively disclosed inside information in these jurisdictions. The risk of civil and criminal liability for foreign investors has increased as regulators push to clean up the laissez-faire attitude towards inside information that has historically prevailed in the Hong Kong and PRC markets.
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From Vol. 5 No.48 (Dec. 20, 2012)
SEC Settles Insider Trading Action against Tiger Asia Management
On December 12, 2012, the SEC charged Tiger Asia Management, LLC (Tiger Asia Management), Tiger Asia Partners, LLC (Tiger Partners) and their principal, Sung Kook (Bill) Hwang, with insider trading and market manipulation relating to their trading in the shares of Bank of China, China Construction Bank and other Chinese companies. The same day, Tiger Asia Management, Tiger Partners and Hwang agreed to pay $44 million in the aggregate to settle the charges. This article summarizes the underlying misconduct, the settlement terms and the SEC’s charges. See generally “Structuring, Regulatory and Tax Guidance for Asia-Based Hedge Fund Managers Seeking to Raise Capital from U.S. Investors (Part Two of Two),” The Hedge Fund Law Report, Vol. 5, No. 32 (Aug. 16, 2012). Tiger Asia Management faces parallel criminal charges brought by the U.S. Attorney’s Office for the District of New Jersey. For the details of an action brought by Hong Kong securities regulators against Hwang and Tiger Asia Management arising out of the same alleged insider trading, see “Hong Kong Securities and Futures Commission Wins Appeal of Insider Trading Action Against New York-Based Hedge Fund Manager Tiger Asia Management,” The Hedge Fund Law Report, Vol. 5, No. 10 (Mar. 8, 2012).
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From Vol. 5 No.32 (Aug. 16, 2012)
Structuring, Regulatory and Tax Guidance for Asia-Based Hedge Fund Managers Seeking to Raise Capital from U.S. Investors (Part Two of Two)
Over the past several years, U.S. investors have broadened their alternative investment horizons by exploring investment opportunities with Asia-based fund managers. Asia-based fund managers provide a unique perspective on alternatives which translates to differing investment strategies that appeal to U.S. investors seeking uncorrelated returns or “alpha.” Nonetheless, Asia-based fund managers that seek to attract U.S. investor capital must recognize the intricate regulations that govern investment manager and fund operations in the U.S. and other jurisdictions, such as the Cayman Islands where many funds are organized to attract U.S. investors. This is the second article in a two-part series designed to help Asia-based fund managers navigate the challenges of structuring and operating funds to appeal to U.S. investors. The authors of this article series are: Peter Bilfield, a partner at Shipman & Goodwin LLP; Todd Doyle, senior tax associate at Shipman & Goodwin LLP; Michael Padarin, a partner at Walkers; and Lu Yueh Leong, a partner at Rajah & Tann LLP. This article describes in detail a number of the key U.S. tax, regulatory and other considerations that Asia-based fund managers are concerned with or should consider when soliciting U.S. taxable and U.S. tax-exempt investors. The first article described the preferred Cayman hedge fund structures utilized by Asia-based fund managers, the management entity structures, Cayman Islands regulations of hedge funds and their managers and regulatory considerations for Singapore-based hedge fund managers. See “Structuring, Regulatory and Tax Guidance for Asia-Based Hedge Fund Managers Seeking to Raise Capital from U.S. Investors (Part One of Two),” The Hedge Fund Law Report, Vol. 5, No. 31 (Aug. 9, 2012).
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From Vol. 5 No.31 (Aug. 9, 2012)
Structuring, Regulatory and Tax Guidance for Asia-Based Hedge Fund Managers Seeking to Raise Capital from U.S. Investors (Part One of Two)
U.S. hedge fund investors are continuously seeking attractive investment opportunities and are increasingly expanding their search to incorporate Asia-based hedge fund managers. At the same time, Asia-based hedge fund managers are navigating the challenging capital raising environment by reaching beyond their borders to attract U.S. investors. However, Asia-based fund managers seeking to attract capital from U.S. investors must contend with a plethora of U.S. and foreign regulations in raising and managing such capital. As such, Asia-based fund managers must work closely with U.S., Cayman and local counsel to develop a cohesive and carefully thought out fund and management structure, intertwining the various regulatory requirements of the applicable jurisdictions, all of which must be adhered to by the fund manager, any sub-advisers and their respective affiliates. This is the first in a two-part series of guest articles designed to help Asia-based fund managers navigate the challenges of structuring and operating funds to appeal to U.S. fund investors. The authors of this article series are: Peter Bilfield, a partner at Shipman & Goodwin LLP; Todd Doyle, senior tax associate at Shipman & Goodwin LLP; Michael Padarin, a partner at Walkers; and Lu Yueh Leong, a partner at Rajah & Tann LLP. This first article describes the preferred Cayman hedge fund structures utilized by Asia-based fund managers, the management entity structures, Cayman Islands regulations of hedge funds and their managers and regulatory considerations for Singapore-based hedge fund managers. The second article in the series will detail a number of the key U.S. tax, regulatory and other considerations that Asia-based fund managers should consider when soliciting U.S. taxable and U.S. tax-exempt investors.
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From Vol. 5 No.30 (Aug. 2, 2012)
China Launches Landmark Reforms Impacting Hedge Fund Capital Raising, Investments and Operations
The Chinese government and securities regulators recently undertook a series of historic reforms aimed at dismantling regulations that separate China from international markets. The first and boldest initiative, the Qualified Domestic Limited Partner Program, has vast potential to enable foreign hedge fund managers and other institutional investors to raise Renminbi (RMB)-denominated funds in mainland China. See “Local Currency Hedge Funds Expand Marketing and Investment Opportunities, but Involve Currency Hedging and Other Challenges,” The Hedge Fund Law Report, Vol. 3, No. 1 (Jan. 6, 2010). The second initiative, a trial scheme in the prosperous coastal city of Wenzhou, allows residents to invest funds abroad and facilitates the conversion of underground private lenders into loan companies servicing small and medium-sized enterprises. The third set of reforms expands the Qualified Foreign Institutional Investor program, enabling foreign hedge funds managers and other institutional investors to invest more easily in Chinese markets. The fourth initiative, the Renminbi Qualified Foreign Institutional Investor scheme, allows Hong Kong-based arms of major Chinese asset managers and securities companies to raise capital from foreign investors that can then be directly invested into mainland China’s markets. On the flip side, The National People’s Congress is also proposing to implement significant regulations for private funds and their managers by amending the 2004 Securities Investment Funds Law. This article summarizes key highlights of each of these initiatives. See also “Questions Hedge Fund Managers Need to Consider Prior to Making Investments in Chinese Companies,” The Hedge Fund Law Report, Vol. 4, No. 21 (Jun. 23, 2011).
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From Vol. 5 No.12 (Mar. 22, 2012)
Preqin/Global ARC Report Details Preferences of Asia-Pacific Institutional Hedge Fund Investors Regarding Manager Selection, Geography, Strategies, Fund Structures and Terms
Hedge fund managers continue to face a challenging capital raising environment. As such, many managers have extended their reach to find new sources of capital, with a particular focus on institutional investors. At the same time, Asia-Pacific institutional investors are becoming increasingly educated about the global alternative investment fund industry and have begun to dip their toes into the alternative investment waters. Yet, to procure investments from Asia-Pacific institutional investors, fund managers must understand these investors and their investment priorities. With this in mind, Preqin, an alternative investment research firm, and the Global Absolute Return Congress (Global ARC), conducted a survey of Asia-Pacific institutional investors in hedge funds to better understand these investors’ attitudes towards alternative investment funds. Preqin and Global ARC recently released a report of the study findings (Report). Overall, the Report indicated that, although weak 2011 performance was a concern among Asia-Pacific institutional investors, confidence in hedge funds remains strong. This article highlights the Report’s key findings and their implications for hedge fund managers targeting this investor class.
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From Vol. 5 No.10 (Mar. 8, 2012)
Hong Kong Securities and Futures Commission Wins Appeal of Insider Trading Action Against New York-Based Hedge Fund Manager Tiger Asia Management
On February 23, 2012, the Hong Kong Court of Appeal ruled on a dispute between hedge fund manager Tiger Asia Management LLC and the Hong Kong Securities and Futures Commission. This ruling adds to the total mix of considerations for any U.S.-based hedge fund manager considering entering the Hong Kong market. See also “Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part Four of Four),” The Hedge Fund Law Report, Vol. 5, No. 3 (Jan. 19, 2012). For a discussion of another matter highlighting the asymmetry between U.S. and non-U.S. insider trading doctrine, see “FSA Imposes £7.2 Million Penalty on Hedge Fund Manager David Einhorn and Greenlight Capital for Unintentional Insider Dealing in Shares of British Pub Owner Punch Taverns Plc,” The Hedge Fund Law Report, Vol. 5, No. 5 (Feb. 2, 2012).
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From Vol. 5 No.3 (Jan. 19, 2012)
Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part Four of Four)
This article is the fourth in a four-part series by Maria Gabriela Bianchini, founder of Optionality Consulting. The first article in this series identified factors that hedge fund managers should consider in determining whether to open an office in Asia and compared the relative merits of Hong Kong and Singapore as locations for an office. See “Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part One of Four),” The Hedge Fund Law Report, Vol. 4, No. 43 (Dec. 1, 2011). The second article in this series discussed technical steps and considerations for the actual process of opening an office in either Hong Kong or Singapore. See “Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part Two of Four),” The Hedge Fund Law Report, Vol. 4, No. 44 (Dec. 8, 2011). The third article in this series described the practical impact of Singapore’s new regulatory regime on hedge fund managers. See “Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part Three of Four),” The Hedge Fund Law Report, Vol. 4, No. 45 (Dec. 15 2012). This article series concludes with a discussion of topical regulatory issues regarding opening an office in Hong Kong.
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From Vol. 4 No.45 (Dec. 15, 2011)
Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part Three of Four)
Any asset manager who chooses to open up an office in Singapore will have significant interaction with the Monetary Authority of Singapore (MAS), which acts as Singapore’s unified financial services regulator. The MAS has confirmed that in the first half of 2012, it will implement a new regulatory structure over asset managers that maintain an investment management office in Singapore. This article is the third in a four-part series by Maria Gabriela Bianchini, founder of Optionality Consulting. The first article in this series identified factors that hedge fund managers should consider in determining whether to open an office in Asia and compared the relative merits of Hong Kong and Singapore as locations for an office. See “Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part One of Four),” The Hedge Fund Law Report, Vol. 4, No. 43 (Dec. 1, 2011). The second article in this series discussed technical steps and considerations for the actual process of opening an office in either Hong Kong or Singapore. See “Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part Two of Four),” The Hedge Fund Law Report, Vol. 4, No. 44 (Dec. 8, 2011). This article describes Singapore’s new regulatory structure for hedge fund managers, which is expected to take effect in the first half of 2012, and discusses the application of the new regulations with respect to staffing, compensation, taxation, compliance, regulatory filings and other matters. Part four will conclude the series with a discussion of Hong Kong.
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From Vol. 4 No.44 (Dec. 8, 2011)
Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part Two of Four)
Many hedge fund managers based in the U.S. or Europe have considered opening an office in Asia, but few are conversant with the benefits and burdens of the various Asian jurisdictions, and fewer still are familiar with the specific steps necessary to open an Asian office. To address this information gap, Maria Gabriela Bianchini, founder of Optionality Consulting, is publishing a four-part series in The Hedge Fund Law Report. The first article in this series identified factors that hedge fund managers should consider in determining whether to open an office in Asia and compared the relative merits of Hong Kong and Singapore as locations for an office. See “Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part One of Four),” The Hedge Fund Law Report, Vol. 4, No. 43 (Dec. 1, 2011). This article – the second in the series – discusses technical steps and considerations for the actual process of opening an office in either Hong Kong or Singapore. Many of these steps are applicable to the establishment of any new office outside of a manager’s home jurisdiction, but they are discussed in this article in the context of an Asian office opening. Part three of this series will discuss the changing regulatory landscape affecting managers in Singapore and part four will conclude with a discussion of Hong Kong.
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From Vol. 4 No.43 (Dec. 1, 2011)
Primary Regulatory and Business Considerations When Opening a Hedge Fund Management Company Office in Asia (Part One of Four)
Over the past 24 months, many articles have been written about global hedge fund managers expanding into Asia. Indeed, with global markets continuing to experience volatility and Western governments facing significant challenges, many are looking East. In the current environment, there are many reasons why a U.S.- or European-based manager may choose to open an office or offices in Asia, including, among other things, access to an abundance of Asian investment opportunities and favorable regulatory treatment in certain Asian jurisdictions. See “AsiaHedge Study Finds That a Growing Proportion of Hedge Funds with Asia-Focused Strategies are Managed from Asia,” The Hedge Fund Law Report, Vol. 4, No. 36 (Oct. 13, 2011). Establishing an office in Asia can also facilitate tax-efficient deployment of certain Asia-focused investment strategies. For these and other reasons, many international hedge fund managers have established satellite offices in Asia. Before embarking on this venture, however, a manager should carefully evaluate the host of considerations critical to determining whether and how to accomplish this task. Hong Kong and Singapore remain the two most common destinations for offices in Asia; Mumbai, Beijing and Sydney are also home to fund managers, but generally host country-specific strategies. In this guest article, Maria Gabriela Bianchini, founder of Optionality Consulting, a Singapore-based consulting firm specializing in assisting hedge funds with regulatory and operational issues, provides a roadmap for opening up a subsidiary office in Hong Kong or Singapore. In particular, Bianchini discusses the impact of the following factors, among others, in determining whether to open an office in Hong Kong or Singapore: composition of the manager’s portfolio; tax treaty status in light of the manager’s investment strategies; whether the purpose of the office is investment or marketing; licensing and regulatory issues; number of people in the office; whether the manager focuses on fixed income, equities, illiquid assets or other strategies; access to deal and information flow; access to talent; and personal decisions (such as housing, schools for children and related considerations). This article is the first in a four-part series by Bianchini to be published in The Hedge Fund Law Report. Part two will discuss practical considerations and guidance with respect to opening an office in Singapore and Hong Kong, Part three will discuss the changing regulatory landscape affecting managers in Singapore and Part four will conclude with a discussion of Hong Kong.
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From Vol. 4 No.36 (Oct. 13, 2011)
AsiaHedge Study Finds That a Growing Proportion of Hedge Funds with Asia-Focused Strategies are Managed From Asia
A September 2011 survey (Survey) by AsiaHedge Research uncovered data with respect to: assets under management (AUM) by Asia-based hedge fund managers and Asia-focused strategies; AUM trends; the composition of the investor base in Asia-focused funds; the evolving industry structure; the level of AUM in Asia-focused hedge funds managed from within the region versus from outside of the region; the amount of assets managed from various sub-regions in or focused on the region; and the top Asia-focused strategies by AUM. This article details the key points from the Study.
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