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Hedge fund Segantii Capital Management, its founder and a former trader pleaded not guilty on Monday at the start of an insider trading trial at Hong Kong's District Court.
The trial, involving what was once one of Asia's largest hedge funds, is being closely watched as a test of a crackdown on insider dealing amid surging share sale activity.
The Hong Kong Securities and Futures Commission in 2024 started criminal proceedings against Segantii, its founder and Chief Investment Officer Simon Sadler and former trader Daniel La Rocca on suspicion of insider dealing in shares of fashion retailer Esprit Holdings (0330.HK) ahead of a block trade in June 2017.
Prosecutors allege the defendants sold Esprit shares after receiving advance information about a planned block sale. Bank of America's (BAC.N) Merrill Lynch unit arranged the deal at the instruction of client Lone Pine Capital.
Tony Psarianos, a former banker at Bank of America, told Segantii's La Rocca about a potential deal involving 190 million Esprit shares "before the market opened on the previous day of the block trade", a court document showed.
Psarianos will be in Hong Kong and testify on May 11 and 12, prosecutors said on Monday.
Sadler, dubbed Asia's "block trade king", is the owner of Blackpool Football Club, his hometown soccer team. The case has led to the shutdown of Segantii's $5 billion fund.
The trial is set to last 25 days until June 8. The maximum prison term a district court judge can impose is seven years.
