Hong Kong ‘block trade king’ exploited bank lapse to make HK$1.7 million, court told

Prosecutors allege Simon Sadler and Daniel La Rocca used confidential information about planned block trade to sell more than 1.7 million Esprit shares

A prominent hedge fund manager took advantage of a bank’s “wholesale collective failure” to prevent illicit trading, making HK$1.7 million in a single day by using confidential information to sell shares in a Hong Kong fashion house nine years ago, prosecutors alleged on Tuesday.

British-born investor Simon Sadler is on trial at the District Court alongside the now-defunct Segantii Capital Management and former employee Daniel Anthony La Rocca Jnr over alleged insider dealing in the shares of Hong Kong-listed Esprit on June 14, 2017.

Once dubbed Asia’s “block trade king”, Sadler founded Segantii in 2007, building the Hong Kong investment firm into one of the region’s largest hedge funds, with nearly US$5 billion in assets in its heyday.

Sadler also owns his hometown football club, Blackpool FC.

Opening their case on Monday, prosecutors argued that Sadler and La Rocca sold more than 1.7 million Esprit shares that day and took short positions after learning that a major shareholder planned to offload its entire stake.

Lone Pine, an American investment company that owned more than 10 per cent of Esprit, sold more than 195 million shares at HK$4.68 each to nine institutions, with Segantii acquiring 8 million on June 15, 2017.

Sarah Clarke KC, representing the prosecution, said the defendants earned a profit by selling Esprit shares ahead of an inevitable price drop due to the sudden surge in market availability.