Segantii Capital Management founder Simon Sadler told a Hong Kong court that he was under significant personal and professional strain in 2017, the year central to allegations that the hedge fund traded on material non-public information in connection with Esprit Holdings shares, according to a report by Bloomberg.
Testifying for a second day in the high-profile trial, Sadler became the first defence witness after weeks of prosecution evidence, including testimony from former Bank of America traders. The case concerns a series of trades worth just over $1m that prosecutors argue were based on improperly obtained information, but which ultimately contributed to the collapse of the hedge fund, which once managed more than $6bn.
Sadler described a period in which multiple high-stakes positions and internal pressures were weighing heavily on him, including difficult conversations with staff and volatile performance across key trades. He said the firm was exposed to significant risk through a major position involving the valuation spread between Tencent Holdings and Naspers, which he told colleagues was critical to Segantii’s annual performance. The position was losing money at the time, he said.
He also referenced other market distractions, including shifts in sentiment around China Evergrande, which added to the strain on the firm’s portfolio management process.
Sadler told the court that he was experiencing serious stress during this period, including sleep deprivation and personal challenges. He said he was attending Alcoholics Anonymous meetings at the time following a period of heavy drinking, and was attempting to take more time away from work for family reasons.
The trial centres on trading activity in Esprit Holdings in June 2017, ahead of a large share sale by US investment firm Lone Pine Capital. Prosecutors allege that information passed from Bank of America traders during early discussions constituted material non-public information, which was then used by Segantii traders in positioning around the block trade.
A key issue in the case is whether initial conversations between Bank of America trader Tony Psarianos and Segantii staff, including Daniel La Rocca, crossed the threshold from routine market dialogue into non-public, price-sensitive information. Following those calls, La Rocca circulated internal notes suggesting Lone Pine was the likely seller and indicating a potential discount level.
Sadler told the court he did not see that communication at the time and said he would have rejected the proposed pricing assumptions had he been aware of them. He maintained that trading decisions were based instead on internal research and analysis of Esprit’s fundamentals, including work from a former employee, rather than on any external information shared by the bank.
He also argued that Bank of America’s approach to communication bypassed Segantii’s established compliance protocols, which required sensitive discussions to be routed through senior executives or compliance personnel.
Sadler further told the court that he was “shocked” when he later reviewed the email chain relating to the block trade the following day.
Beyond the specific trades under scrutiny, Sadler used his testimony to reflect on the broader trajectory of Segantii, including the firm’s decision in 2024 to return capital to investors and wind down operations as regulatory scrutiny intensified. He said the move was driven by concerns over market confidence and the practical difficulties of continuing the business under investigation.
“Financial markets are all about confidence,” he told the court. “Once we were charged, there was little doubt in my mind that the right thing to do was to shut the business.”
The trial continues, with cross-examination of Sadler expected to resume as prosecutors continue to challenge the firm’s account of the events surrounding the Esprit trades.
