Segantii Capital Management’s founder Simon Sadler returned to a Hong Kong court this week, as the prosecution delivered its closing argument in a high-profile insider trading case that has gripped the city’s hedge fund community.
Sadler, once known as Asia’s “block trade king,” is standing trial on insider-trading charges linked to a series of trades in Hong Kong-listed fashion retailer Esprit Holdings Ltd. dating back to June 2017. The trades came before US hedge fund firm Lone Pine Capital sold its stake in Esprit, and followed calls between Segantii staff and Tony Psarianos, a Bank of America Corp. trader at the time.
Prosecutors said on Tuesday that the defense’s case “collapses” under the weight of evidence. In proceedings lasting more than a month, prosecution and defense displayed numerous emails, played phone recordings, and called witnesses including Psarianos and Anshul Trivedi, another former Bank of America employee.
Although much of prosecutor Sarah Clarke’s argument focused on the minutiae of Hong Kong securities law and legal precedents, her basic claim was simple: There was no plausible explanation for Sadler and former Segantii trader Daniel La Rocca selling Esprit shares the day before the block trade except their possession of inside information.
Defense lawyers will get a chance to respond to that in the coming days, but Sadler’s earlier testimony suggested the likely counter-argument. He previously told the court that the selling came after he read research on Esprit written by former Segantii analyst Vikki Huang, and that he felt the position had become “lazy, stale” over time.
The trial, which had been adjourned since the end of June , is expected to wrap up this week, although the verdict will come later. Sadler is standing trial alongside La Rocca and the firm itself, meaning separate defense teams still have to make arguments.
Sadler founded Segantii in 2007 with just $26 million, and eventually amassed assets of more than $6 billion. He turned the firm into one of the first ports of call for banks trying to pull off equity sales in the region, alongside much larger global firms such as Marshall Wace and Jane Street.
Stake Sale
The trial centers around Lone Pine’s sale of its entire remaining 10% stake in Esprit, a deal that was equivalent to more than 60 times the stock’s average daily trading volumes at the time. The prosecution alleged that Sadler and La Rocca acted on price-sensitive inside information given by Psarianos ahead of the deal.
The day before Lone Pine gave Bank of America the order for the trade, Psarianos told La Rocca that an unnamed shareholder in Esprit was considering selling at least 190 million shares. La Rocca quickly figured out that Lone Pine Capital was mulling the disposal of its remaining stake. He sent an email to Sadler and other Segantii colleagues letting them know.
The prosecution alleged that, within hours, they began to sell Esprit shares Segantii already owned and built a short position through a series of trades worth just over $1 million — a tiny sum for a firm that managed billions of dollars at the time.
Sadler previously told the court that at the close of June 14, 2017, his own strategy still had 65% of the Esprit shares he held at the start of the day. A short position taken by Segantii was “inventory management” at the multi-strategy firm, he said.
Hong Kong’s securities watchdog initiated criminal proceedings against Sadler, La Rocca and the firm in May 2024. The allegations prompted investors to redeem and led banks to limit or review their relationships with the once-coveted hedge fund client.
Within weeks, Segantii — which had employed about 140 people in Hong Kong, New York and London — announced it was returning capital to investors.