<div id="readability-page-1"><div>One of Hong Kong’s most high-profile insider trading cases began after compliance staff at Bank of America Corp., the firm arranging a block trade, flagged concerns about handling price-sensitive information that wasn’t public.The new details emerged on Thursday in a Hong Kong District Court hearing ahead of the high-profile insider trading trial involving Segantii Capital Management and its founder, Simon Sadler, once known as Hong Kong’s “block trade king.”Wayne Walsh, the lawyer representing the Wall Street bank, won a request to have the hearing closed to the public temporarily while sensitive documents were discussed. Walsh argued some material was provided to the regulator on a “limited waiver” for its supervisory and regulatory functions and shouldn’t be used by the defense. The court was presided over by Judge Josiah Lam.The trial of the Hong Kong-based hedge fund firm Segantii, Sadler and former trader Daniel La Rocca is set to begin May 4 and is estimated to last 25 days. It’s expected to shine a light on sales of blocks of shares that happen away from exchanges, an often opaque process. Since criminal proceedings began in 2024, the city’s securities watchdog has sought to tighten scrutiny on how confidential price-sensitive information is shared between banks and their clients ahead of such deals.Hong Kong’s Securities and Futures Commission accused the trio of trading $1.14 million worth of shares of fashion retailer Esprit Holdings Ltd. before US hedge fund firm Lone Pine Capital’s June 2017 sale of a 10% stake. They allegedly received inside information on the upcoming deal from Tony Psarianos, whose regulatory records showed him to be employed by Bank of America’s Merrill Lynch unit at the time.Bank of America’s Merrill Lynch unit handled the Lone Pine stake sale and is not a defendant in this case. Psarianos and another former Merrill Lynch trader Anshul Trivedi are key witnesses in the trial, the court was previously told.Walsh on Thursday said Bank of America’s compliance staff flagged the issue to the legal department one day after the block trade took place, then, within a week, the SFC was made aware. Four calls with the SFC took place by late July and an internal bank review of the transaction was by then well underway. The firm engaged Freshfields to help with legal counsel. The bank had earlier sought to block the cache of around 40 documents from court proceedings, citing professional privilege. They included internal interviews, self reports and reports requested by the SFC, contact records with clients and material gathered during internal disciplinary proceedings. Some of the information regarding how the trade progressed was only known to Merrill Lynch and was “fundamental” to Sadler’s defense, the hedge fund founder’s lead counsel Clare Montgomery said during a Feb. 20 hearing. The SFC had earlier transferred some Bank of America documents to the defendants by mistake, prosecutors said during the February hearing. District Judge Josiah Lam then directed the regulator to issue a notice to the bank to hand over other documents. Sadler and La Rocca have pleaded not guilty to insider trading. Each face a maximum prison sentence of seven years if convicted. Segantii was often the first port of call for bankers handling such transactions when they needed to gauge demand and set price ranges for upcoming deals.Sadler founded Segantii in Hong Kong in 2007 with just $26 million. At the peak in 2021, it oversaw $6.2 billion of assets, ranking it as one of the largest Asia-based hedge funds both by headcount and assets under management. While it dabbled in equity capital markets deals, including initial public offerings and block trades, it also traded a multitude of other strategies. Segantii decided to shutter its hedge fund in May 2024, following the announcement of the criminal proceedings.</div></div>

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The insider trading trial involving Segantii Capital Management and its founder Simon Sadler began in Hong Kong, following concerns raised by Bank of America about handling non-public price-sensitive information. The trial, set to start on May 4, will last approximately 25 days and is expected to address opaque share block sales. Sadler and former trader Daniel La Rocca face charges related to trading shares of Esprit Holdings before a significant stake sale by Lone Pine Capital. Both have pleaded not guilty, with potential sentences of up to seven years if convicted.

- The insider trading case involves Bank of America, Segantii Capital Management, and its founder, Simon Sadler, and is set for trial starting May 4, 2026.  
- Accusations include trading $1.14 million in shares before a significant stake sale, with allegations of receiving inside information from a former Merrill Lynch employee.  
- The Securities and Futures Commission has intensified scrutiny on confidential information sharing, and if convicted, Sadler and former trader La Rocca each face a maximum of seven years in prison.

Segantii Insider Trading Case Began on Bank of America Red Flags