Tiger Asia is challenging the Securities and Futures Commission's (SFC) proposed ban and asset freeze, saying the regulator should stick to just pursuing a criminal prosecution.

The SFC says it has to use a two-fold strategy to tackle market misconduct -- institute criminal proceedings but also take remedial actions to ensure investor protection and claw back the profits made from insider-dealing cases.

But given that Tiger Asia and all of its employees are based outside of Hong Kong, the SFC has not been able to ?pursue a criminal case against the individuals it alleges were involved.

In the first case of its kind, the market regulator sought to prevent Julian Robertson-seeded Tiger Asia from dealing in listed securities and derivatives last year.

The SFC alleged that Tiger Asia, its portfolio manager Bill Hwang, and two other executives Raymond Park and William Tomita, engaged in insider trading and market manipulation in the shares of China Construction Bank Corp (CCB) and Bank of China in 2008 and 2009.

SFC has accused Tiger Asia of insider trading in shares of Bank of China in January 2009 after receiving confidential and price-sensitive information regarding two share placements. This was the second such charge levelled against the firm by the SFC.

The regulator has applied to freeze HK$8.6 million ($1.1 million) of Tiger Asia's assets, the amount of notional profit made by the firm in one of the alleged insider-trading transactions in Bank of China.

In August 2009, the SFC applied for a high court injunction to freeze close to HK$30 million of Tiger Asia's assets, equivalent to the profit made by the firm through alleged insider trading in shares of China Construction Bank.

Copyright Reuters, 2011