The high-profile insider-trading trial involving Segantii Capital Management concluded Friday in Hong Kong, with defense lawyers challenging prosecution allegations in closing statements. The 31-day trial, which began in early May, centered on accusations that Segantii, founder Simon Sadler, and former trader Daniel La Rocca offloaded more than $1 million in Esprit Holdings shares in 2017 based on confidential information — that a large shareholder was seeking to exit — received from a trader at Bank of America Corp.'s Merrill Lynch unit.
The Hong Kong District Court is set to deliver its verdict at a Feb. 11 hearing, Judge Josiah Lam said on Friday. If convicted, Sadler and La Rocca could face up to seven years in prison. Segantii announced plans to shut down its hedge fund, which once oversaw more than $6 billion in assets, putting more than 140 employees out of a job.
On June 14, 2017, La Rocca received a call from Merrill Lynch sales trader Tony Psarianos regarding an unidentified Esprit shareholder looking to offload over 190 million shares. Segantii sold more than a third of its Esprit shares later that day, one day before Lone Pine Capital's eventual block trade.
Prosecution counsel Sarah Clarke argued that Sadler and La Rocca exploited Merrill Lynch's wholesale collective failure. Defense counsel countered that the prosecution failed to prove the information constituted insider knowledge and that the bank's actions were exploratory.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing