Issue #56: Don’t Do It!
Welcome to the 56th edition of OIA!
Here are the latest 🌶 headlines in APAC:
Ling Yah
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A Mega US Securities Fraud Settlement?
Chinese tech giant Alibaba Group Holding has agreed to shell out USD 433.5 million to settle its U.S. securities class action!
🍿 What Happened?
The lawsuit, filed in 2020 in Manhattan federal court, alleged that the e-commerce behemoth misled investors about its competitive practices and the ill-fated IPO of its financial-services affiliate, Ant Group.
The conditional settlement, which awaits final approval, covers investors in Alibaba's American depositary shares from November 2019 to December 2020, who claimed losses when these practices came to light.
👀 Guess What?
This isn't Alibaba's first rodeo.
In 2015, they paid USD 250 million to settle another IPO-related lawsuit over alleged non-disclosure of regulatory discussions about counterfeit goods on its platform.
Will this be the last of big financial payouts for this Chinese giant?!
A Cautionary Tale
The Malaysian Court of Appeal has just substantially increased the damages awarded to N Sundra Rajoo, former director of the Asian International Arbitration Centre (AIAC).
🍿 What Happened?
The case traces back to October 2021, when businessman Rayus Abdul Rahim posted four defamatory comments on former minister Shahrir Abdul Samad's Facebook account. These comments concerned criminal breach of trust charges that had been brought against Sundra in March 2019 for alleged offences involving MYR 1.1 million.
When Sundra sued for defamation, Rayus neither defended the suit nor appeared in court, leading to a default judgment in November 2022 where the High Court awarded MYR 80,000 in damages.
Most recently, the Court of Appeal nearly tripled the damages to MYR 250,000, deeming the original award "manifestly low" given the four separate publications over two days. The Court also ordered Rayus to pay MYR 20,000 in appeal costs and raised the High Court costs from MYR 4,000 to MYR 20,000 – bringing the total payable to MYR 290,000.
👀 TL;DR
The price of a few hasty social media comments can be steep indeed.
You have been warned!
Don’t Do This!
French banking giant BNP Paribas SA has been indicted by South Korean prosecutors for allegedly violating the country's short-selling rules.
🍿 What Happened?
The case stems from allegations of naked short-selling – the practice of selling stocks without first borrowing them or ensuring they can be borrowed, which is explicitly prohibited under Korea's Capital Markets Act.
The bank had already been hit with a substantial fine of KRW 11 billion (USD 7.9 million) for these violations, while its local brokerage unit faced an additional KRW 8 billion penalty.
The Seoul Southern District Prosecutors' Office, which earlier this month announced indictments against a global investment bank and hedge fund without naming them, has now moved forward with formal charges against BNP Paribas.
👀 What This Means
The latest development comes amid intensified regulatory scrutiny in South Korea's financial markets. Just last December, the Korean financial regulators imposed a total fine of KRW 26.5 billion ($19 million) on BNP Paribas and HSBC Holdings for naked short selling.
Similar enforcement measures were taken against other global players, including HSBC's Hong Kong unit and three of its traders in March, and record fines imposed on two subsidiaries of the former Credit Suisse group in July 2023.
Consequently, South Korean authorities implemented a market-wide ban on short-selling in November 2023, which is set to remain in place until March 2025, when new detection systems are expected to be operational.
We’d say that South Korea’s message is pretty loud and clear, won’t we?
Spotlight: Basil Lee
Basil Lee is a Counsel at Helmsman LLC who specialises in intellectual property, technology, media, telecommunications and commercial dispute resolution.
Food Reveal
A “blink and you’ll miss it” foodie gem near Chinatown in Kuala Lumpur!
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