Segantii Founder’s Hong Kong Insider Trading Trial Nears End

The insider trading trial of Segantii Capital Management founder Simon Sadler is nearing its conclusion in Hong Kong. Sadler, former Segantii trader Daniel La Rocca and the hedge fund are accused of trading Esprit Holdings shares using confidential information before a large sale by Lone Pine Capital.

Prosecutor Sarah Clarke told the court that evidence presented during more than a month of hearings weakened the defence case. Lawyers for Sadler, La Rocca and Segantii are expected to make their closing arguments in the coming days. The trial is due to finish this week, while a verdict will be delivered later.

The case concerns trades in June 2017, before Lone Pine sold its remaining 10% stake in Esprit, a Hong Kong-listed fashion retailer. The holding was more than 60 times Esprit’s average daily trading volume at the time, meaning the sale could affect the share price.

Prosecutors allege that Tony Psarianos, then a Bank of America trader, told La Rocca during a phone call that an unnamed shareholder was considering selling at least 190 million shares. La Rocca allegedly identified Lone Pine as the potential seller and passed the information to Sadler and other Segantii employees.

Within hours, Sadler and La Rocca allegedly sold Esprit shares held by Segantii and opened a short position. The trades were worth slightly more than $1 million, while Segantii managed billions of dollars at the time.

The prosecution’s case is that the traders had no credible reason for the transactions apart from their alleged access to information about the planned block sale. The hearings included emails, recorded calls and testimony from Psarianos, former Bank of America employee Anshul Trivedi and other witnesses.

Sadler has denied using inside information. During his testimony, he described Segantii’s Esprit position as “lazy, stale” after reviewing research by former analyst Vikki Huang. He characterized the short position as routine inventory management within the firm’s multi-strategy trading business.

Sadler founded Segantii in 2007 with $26 million. The firm’s assets later exceeded $6 billion, and it became active in Asian equity block trades. Sadler, La Rocca and Segantii have separate legal teams in the case.