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Hong Kong’s financial regulator has launched criminal proceedings in an insider dealing case against hedge fund Segantii Capital Management and its founder and director, Blackpool Football Club owner Simon Sadler.
The Chinese territory’s Securities and Futures Commission said on Thursday it had also started proceedings against former Segantii trader Daniel LaRocca.
According to an SFC statement, the charges relate to dealing in the shares of an unnamed company listed on the Hong Kong Stock Exchange before a block trade in June 2017. A block trade is an off-market purchase or sale of a large amount of shares in a single transaction.
Sadler and LaRocca did not make any pleas at a court hearing on Thursday, the SFC said. It said Sadler was released on cash bail of HK$1mn ($128,000) and LaRocca on bail of HK$500,000, adding that the case had been adjourned to June 12.
Segantii did not immediately respond to a request for comment. Sadler and LaRocca could not be reached for comment.
Sadler founded the fund in 2007 and quickly built it into one of Asia’s largest and best-known hedge funds with offices in Hong Kong, New York and London and more than $6bn in assets.
The Hong Kong company became a big player in block trading, a lucrative corner of financial markets where banks arrange to offload large chunks of stocks through private arrangements so as not to depress a company’s share price.
Segantii was known to be among the most prolific buyers of blocks, and Sadler built strong relationships with big banks as a go-to liquidity provider.
However, block trading came under intense scrutiny after the collapse of Bill Hwang’s family office Archegos Capital Management in March 2021 when banks, including Goldman Sachs, Credit Suisse, Morgan Stanley and Nomura, were left with billions of dollars worth of stock in a handful of companies to offload.
The episode cast a spotlight on block trading and how information is shared between banks and hedge funds, which prompted US regulators to launch an investigation into the Wall Street practice.
In 2019, Sadler purchased Blackpool FC, the football club of his home town in the UK, after it went into an insolvency process.
Additional reporting by Cheng Leng in Hong Kong
