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Segantii Pleads Not Guilty in Alleged 2017 Insider Dealing Case Involving HKD1.6 million Gain from Short Selling ESPRIT HOLDINGS (00330.HK)
According to local media reports, hedge fund management company Segantii Capital Management Limited, its director and chief investment officer Simon Sadler, and former trader Danie...
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Segantii Pleads Not Guilty in Alleged 2017 Insider Dealing Case Involving HKD1.6 million Gain from Short Selling ESPRIT HOLDINGS (00330.HK)
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According to local media reports, hedge fund management company Segantii Capital Management Limited, its director and chief investment officer Simon Sadler, and former trader Daniel La Rocca have been prosecuted by the Securities and Futures Commission (SFC) for alleged insider dealing in ESPRIT HOLDINGS (00330.HK)  -0.010 (-1.538%)   prior to a block trade in 2017. The two individuals and the company have denied the charges. The case commenced trial yesterday (4th) at the District Court. In its opening statement, the prosecution said that after obtaining inside information, the two sold their holdings in ESPRIT HOLDINGS shares, with the second defendant also borrowing shares to short sell. They allegedly gained at least HKD1.6 million from the insider dealing.

In 2017, US investment management firm Lone Pine Capital LLC intended to dispose of approximately 10% of its stake in ESPRIT and engaged Merrill Lynch Far East Limited (MLFE) to arrange a block trade aimed at reducing the market impact of the disposal. On 14 June 2017, MLFE trader Tony Psarianos approached the second defendant while seeking potential buyers and informed him of a block trade involving 190 million ESPRIT shares.

After market open on the same day, the first and second defendants successively sold their ESPRIT shares. The second defendant also placed orders to borrow shares for short selling. The total volume sold was about 1.7 million shares at prices ranging from HKD5.2 to HKD5.35. The following day, MLFE conducted the block trade, with the third defendant, Segantii, acquiring 8 million ESPRIT shares at HKD4.68 per share and selling nearly 6 million shares later the same day at an average price of HKD4.72.

The prosecution alleged that the defendants conducted insider dealing on 14 June, selling and short selling ESPRIT shares seven times within three hours, involving approximately HKD8.93 million, and thereby gaining at least HKD1.6 million.

The prosecution noted that Segantii had assets under management with a net asset value of about USD2 billion (approximately HKD15.6 billion) at the time. Although the HKD1.6 million to HKD1.7 million involved was not a significant sum relative to Segantiis size, it stressed that the defendants would not have been able to profit without inside information. The hearing continues today (5th). (da/w)(HK stocks quote is delayed for at least 15 mins.)

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