A former Merrill Lynch banker has been named in a Hong Kong insider dealing case against hedge fund Segantii Capital and its director, Blackpool Football Club owner Simon Sadler, according to court documents seen by the FT.
Sadler and former Segantii trader Daniel LaRocca were accused of possessing “insider information” from Tony Psarianos about retailer Esprit’s shares in June 2017, according to the summons to defendants issued in March. Psarianos held a trading licence with Merrill Lynch in Hong Kong at the time.
Sadler and LaRocca “dealt in the listed securities of Esprit by long selling and short selling” roughly HK$9mn ($1.2mn) through the account of Segantii Capital and UBS Securities Asia, the documents said.
They appeared in court on Thursday after being charged with insider dealing by Hong Kong’s Securities and Futures Commission. They did not make any pleas and were released on a cash bail with the case adjourned to June 12. Psarianos is not a defendant in the proceedings, according to the SFC.
The territory’s securities regulator said the case related to the dealing of the shares of an unnamed Hong Kong-listed company before a block trade in June 2017.
The court documents show the case involves the long selling of 1.57mn listed securities in Esprit at an average execution price of HK$5.25 per share and the short selling of 132,000 of the shares at an average price of HK$5.23.
Psarianos worked at Merrill Lynch between 2007 and 2021, according to his LinkedIn profile and SFC official licence details.
The SFC declined to comment further on the court documents. Segantii did not immediately respond to a request for comment on them. Psarianos could not be reached for comment. Merrill Lynch, now called Merrill, and UBS declined to comment.
Asked about the case on Thursday, a Segantii spokesperson said the hedge fund intended to “defend itself vigorously”.
Founded by Sadler in 2007, Segantii grew to become one of the most high-profile and biggest hedge funds in Asia, with over $6bn in assets and branches in Hong Kong, London and New York.
Its Hong Kong unit became a prominent player in block trading, sales of large chunks of a company’s shares arranged by banks through private arrangements so as to avoid depressing a company’s share price.
Block trading came under scrutiny following the collapse of Archegos Capital, which caused a $5.5bn trading loss at Credit Suisse and helped bring about the demise of the Swiss bank.
In 2022, the Financial Times reported that Citigroup and Bank of America suspended equity trading with Segantii citing concerns over its bets on the sale of blocks of shares.
Last year, the Korean Securities and Futures commission imposed a fine of $1.1mn on Segantii in connection with “certain hedging trades” after it purchased stock in a block transaction in October 2019, according to an April filing to the US Securities and Exchange Commission.
