Hong Kong’sSecurities and Futures Commission will next week try to overturn the ruling that it cannot seek civil remedies fromTiger Asia under a law used to freeze the assets of suspected wrong-doers, according to Bloomberg. If it is upheld, the ruling could set a precedent to make it easier for the SFC to punish market misconduct.

The SFC last year alleged in court filings that one of the projects that received backing from Tiger Asia and Tiger Management founder Julian Robertson, traded on advance information from bankers arranging placements of China Construction Bank and Bank of China in 2008 and 2009. The SFC is trying to freeze Tiger Asia’s assets in Hong Kong. Tiger Asia, which has no physical presence in Hong Kong, denies the allegations.

"If a person is not in the jurisdiction but their assets are, then the court can decide whether there are grounds to freeze them," Mark Steward, the SFC's enforcement director, said in an interview with the newsier. "Clearly we are attacking some vested interests who have a lot to lose if we succeed."

Experts say if the appeal is upheld, it could be a landmark for Hong Kong securities law. Richard Chalk, partner at law firm Freshfields Bruckhaus Deringer, told WealthBriefingAsia: "The case is important for two reasons. First, it is consistent with the growing trend of regulators to focus on hedge funds to ensure that they are not used for illicit purposes, such as insider dealing, as witnessed by the high profile prosecution in the US last year ofRaj Rajaratnam .”

“Secondly, in seeking to obtain orders from the High Court to freeze Tiger Asia's assets in Hong Kong, and using that as a basis for seeking other remedies against Tiger Asia, the SFC is seeking to punish market misconduct in a way which avoids it having first to bring either criminal proceedings or civil proceedings before the Market Misconduct Tribunal,” he added.

“The Court of Appeal will need to decide whether the SFC's approach drives a coach and horses through the dual civil and criminal regime which operates in Hong Kong in respect of market misconduct."   

Hong Kong criminalized market manipulation in 2003 but prosecuting suspected offenders is not always straightforward. Overseas investors make up 46 per cent of equities trading turnover for the twelve months preceding September 2012, according to the most recent Hong Kong stock exchange data.

Almost a quarter of Hong Kong-listed firms are incorporated and domiciled elsewhere, according to data compiled by Bloomberg. Mainland Chinese companies made up 46 percent of the exchange's market capitalization through the end of December, according to stock exchange statistics.