Ex-Merrill Banker in HK Insider Case, Career Moves Thwarted

Key Takeaway

• Tony Psarianos, ex-Merrill Lynch banker, implicated in Hong Kong insider-dealing case involving Esprit Holdings Ltd. shares.
• Legal proceedings against Segantii Capital Management and its founder Simon Sadler highlight regulatory scrutiny in Hong Kong.
• Insider dealing allegations affect careers; Daniel La Rocca's move to JPMorgan Chase & Co. thwarted.

Insider Dealing Case Unfolds

Hong Kong's financial community is closely watching as Tony Psarianos, a former banker at Bank of America Corp.’s Merrill Lynch division, is implicated in an insider-dealing case. This case has also entangled Simon Sadler, founder of hedge fund Segantii Capital Management, and former trader Daniel La Rocca. The allegations involve insider information regarding Esprit Holdings Ltd.’s shares in June 2017, with accusations of long-selling 1.57 million securities and short-selling 132,000 shares. Psarianos, who held licenses with Merrill Lynch entities from 2007 through 2021, has not commented on the allegations. Similarly, Bank of America and Segantii Capital Management have refrained from commenting.

Legal Proceedings Initiate

The Securities and Futures Commission (SFC) of Hong Kong has commenced criminal proceedings against Segantii Capital Management Ltd., Simon Sadler, and Daniel La Rocca, marking a significant move in the Asian financial hub. The allegations pertain to insider dealing related to a 2017 block trade. Both Sadler and La Rocca, who have yet to make a plea, were released on bail, with stringent conditions including cash bails, travel restrictions, and prohibitions on contacting prosecution witnesses. This case underscores the regulatory scrutiny facing financial professionals in Hong Kong.

Segantii Capital's Stature

Segantii Capital Management, once celebrated for its role in Asia's hedge fund landscape, faces regulatory challenges. Despite a previous fine by South Korean regulators for hedging trades, the firm has been a notable performer, with a 12% annualized return since inception. This performance has positioned Segantii as a sought-after entity in the region. However, the firm's assets have seen a decline, highlighting the volatile nature of hedge fund management. Segantii's commitment to defending against the charges in Hong Kong reflects the firm's ongoing challenges in navigating regulatory landscapes.

Career Implications for Involved Parties

The insider dealing case has broader implications for the careers of those involved. Daniel La Rocca, who was poised to join JPMorgan Chase & Co., has seen his hiring fall through for undisclosed reasons. This development, communicated to hedge fund clients by JPMorgan, underscores the personal and professional ramifications of regulatory investigations. The case has not only legal but also career consequences for those implicated, affecting their professional trajectories and reputations in the financial industry.