Former Segantii Capital Management trader Robert Gagliardi has been implicated in a series of block trades involving insider information from Morgan Stanley, according to a report by the Financial Times.
As per court documents filed by Nevada-based hedge fund Evolution Capital Management, where Gagliardi was also previously employed, the trader was named in connection with a series of block trades from 2018 to 2021, where investors placed bets against companies based on insider information from Morgan Stanley bankers.
Gagliardi was employed at Hong Kong-based hedge fund Segantii during the period in question before joining Evolution in April 2021. Segantii is currently facing a separate criminal insider dealing case brought by Hong Kong’s Securities and Futures Commission, unrelated to Gagliardi’s tenure.
Evolution’s court filings allege a close relationship between Gagliardi and Pawan Passi, former head of Morgan Stanley’s US equity syndicate desk, with the former referring to Passi as his “daddy”. The firm also linked Gagliardi to bets against winter clothing brand Canada Goose, clinical research company Medpace and rental housing owner Invitation Homes.
The allegations emerged in a lawsuit Gagliardi filed against Evolution in London, where he is seeking a $7.5m bonus he claims he is owed based on his outsized returns. Evolution counters that Gagliardi’s purported involvement in the Morgan Stanley trades justifies withholding the bonus and is seeking to reclaim the $7m it paid him during his 11-month tenure.
Passi and Morgan Stanley were charged with fraud by the SEC, paying fines of $250,000 and $249m respectively, though no specific actions were announced against traders who used it.
Gagliardi’s response to Evolution’s latest filing, which ties him to the US cases, is expected by 5 July.
