An insider trading case involving Asian hedge fund Segantii Capital Management, its British founder, Simon Sadler, and a former trader, will now be heard in a higher court in Hong Kong following a request from the prosecution, according to a report by Reuters.
On Wednesday, the Eastern Magistrates’ Court approved the transfer of the case to a district court, with the next hearing now scheduled for 2 July.
The move means that if found guilty, the defendants could face a maximum prison term of seven years rather than the two to three years that can be imposed by the magistrate’s court.
Segantii, one of Asia’s largest and oldest hedge funds, announced plans to close and refund investors shortly after the Hong Kong Securities and Futures Commission (SFC) initiated criminal proceedings against the firm, Founder and Chief Investment Officer Sadler, and former Trader Daniel La Rocca for alleged insider trading involving shares of a Hong Kong-listed company prior to a block trade in June 2017.
The charges relate to insider information about the Hong Kong-listed fashion chain Esprit Holdings (0330.HK), which according to court documents, Segantii received from Tony Psarianos, a former Merrill Lynch investment banker.
On 14 June, 2017, Segantii sold 1.57 million Esprit shares and short-sold an additional 132,000 shares, with average execution prices of $5.25 and $5.23 per share, respectively. Esprit’s share price subsequently dropped by 24% in June 2017.
Neither Sadler, La Rocca, nor Segantii CEO Kurt Ersoy commented on the charges on Wednesday outside the court hearing, although the firm has previously stated its intention to “defend itself vigorously against the charges.”
