New York-based bank JPMorgan Chase & Co will limit its interactions with Segantii Capital Management, a $4.8bn Asian hedge fund led by Simon Sadler, which is currently facing insider trading charges in Hong Kong, according to a report by Bloomberg.
According to Bloomberg’s unnamed sources, the bank has chosen not to engage with Segantii on new block trades and initial public offerings globally.
Block trades are private transactions conducted off-exchange and involving large quantities of publicly listed shares. Banks involved in these sales must ensure that investors do not become aware of upcoming deals prematurely. Sometimes, potential buyers are given non-public information in a process known as “wall-crossing,” after they agree not to trade based on this information.
JPMorgan will also avoid activities such as establishing new positions with the hedge fund or extending additional financing, having communicated its position to Segantii earlier this week, though the bank continues to conduct some business with the hedge fund.
Global prime brokers associated with Segantii have been evaluating their relationships with the firm, with some deciding to reduce their interactions while the insider trading case is ongoing while others have no immediate plans to alter their relationships.
In a recent performance update to investors, Segantii listed nine banks including JPMorgan, Goldman Sachs Group, BNP Paribas and UBS Group as its prime brokers.
Hong Kong’s Securities and Futures Commission initiated criminal proceedings against Segantii, Sadler and former trader Daniel La Rocca last week. The regulator alleges that they had insider information when trading shares of a locally listed company before a block trade in June 2017. Segantii has stated its intention to mount a vigorous defence against the charges.
Segantii was founded by Sadler, who previously worked as a trader at Dresdner Kleinwort Wasserstein and Deutsche Bank, in Hong Kong in 2007 with $26.5m. The firm has offices in London, New York and Dubai and has seen notable returns particularly in Asia-Pacific equities and equity-linked securities.
According to a recent performance update from Segantii, the firm’s Asia-Pacific equity multi-strategy fund has achieved an annualised return of over 12% since its inception, and a 2.51% increase in Q1 2024.
