Segantii hedge fund insider trading case moved to higher court in Hong Kong (updated)

Esprit Holdings

12/06/2024 07:15

* 
      High-profile British founder Simon Sadler, former trader
show at
hearing
    

        * 
      District court can impose higher maximum prison terms
    

        * 
      Case relates to trading in fashion chain Esprit Holdings
in 2017
    

  
 (Updates with case details and context in paragraphs 8-13)
    By Summer Zhen
       HONG KONG, June 12 (Reuters) - An insider trading case
against Asian hedge fund Segantii Capital Management, its
high-profile British founder Simon Sadler and a former trader
has been moved to a higher court in Hong Kong, a local court
ruled on Wednesday.
    The Eastern Magistrates' Court approved the prosecution’s
request to transfer the case to a district court. The next
hearing is scheduled to take place at the district court on July
2, the court ruled without providing reasons.
    The maximum prison term a district court judge can impose is
seven years, versus two to three years for the magistrate's
court.
    The case marks a turning point for one of Asia's biggest and
oldest hedge funds, which has said it will refund investors, as
well as a step toward heightened scrutiny of trading activities
in the region.
    The Hong Kong Securities and Futures Commission (SFC) said
last month it had started criminal proceedings against Segantii,
its founder and chief investment officer Sadler and former
trader Daniel La Rocca on suspicion of insider dealing in the
shares of a Hong Kong-listed company before a block trade in
June 2017.
    Sadler, dubbed Asia's "block trade king", is also the owner
of his hometown soccer team, Blackpool Football Club.
    Sadler, La Rocca and Segantii CEO Kurt Ersoy declined to
comment on the charges on Wednesday outside a court hearing
room. The company said last month it planned to "defend itself
vigorously against the charges".
    The accusation relates to insider information about Hong
Kong-listed fashion chain Esprit Holdings  0330.HK , the court
readout revealed, adding Segantii received the information from
Tony Psarianos, a person connected to Esprit.
    Psarianos was an investment banker at Merrill Lynch from
2007 to 2021, according to SFC licence records.
    Segantii sold 1.57 million of listed Esprit shares and
132,000 of listed Esprit shares through offloading its long
positions and short-selling, all on June 14, 2017, the court
readout said, at an average execution price of $5.25 and $5.23
per share.
    Esprit's share price slumped 24% in June 2017. 
    Esprit and Psarianos did not immediately respond to Reuters'
requests for comment.
    Segantii was established in 2007. A few weeks after the SFC
prosecution began, Segantii informed its employees the fund was
closing down, according a source with direct knowledge of the
matter who was not authorised to speak with media. Segantii did
not respond immediately to a request for comment.  
    Its flagship Asia-Pacific Equity Multi-Strategy Fund was up
2.8% for the first four months of 2024 after a 1.6% decline in
2023, according to a source who received data on the fund's
performance. It delivered an annualised return of 12% since
inception.
    The fund managed about $4.8 billion at the end of March,
according to a monthly letter seen by Reuters.

 (Reporting by Summer Zhen; Additional reporting by Xie Yu;
Editing by Jamie Freed)
 ((summer.zhen@thomsonreuters.com; 852-3462-7739;))