JPMorgan limits exposure to Segantii amid insider-trading case
NEW YORK: JPMorgan Chase & Co is limiting dealings with Simon Sadler’s Segantii Capital Management Ltd, the Asian hedge fund giant charged with insider trading by authorities in Hong Kong, according to people familiar with the matter.

The New York-based lender won’t engage with Segantii on new block trades and initial public offerings globally, said the people, who asked not to be identified discussing a private matter.

The bank will also refrain from activities such as adding new positions with the hedge fund or providing it with more financing.

JPMorgan informed Segantii of its stance this week, said the people, adding the situation is fluid and could change. A spokesperson at the US bank declined to comment. Segantii declined to comment.

Global prime brokers with ties to Segantii have been assessing their positions with the 16-year-old firm, and deliberating internally if they should make any changes to their relationships, Bloomberg reported earlier this week.

At least two other banks have decided to dial back dealings with the fund while the insider-trading case is pending, people familiar with the matter have said.

Some others have no immediate plans to make changes, they added.

Segantii has long been a prized client of Wall Street banks that need to unload chunks of shares in block trades and stock offerings.

The firm listed nine banks, including JPMorgan, Goldman Sachs Group Inc, BNP Paribas SA and UBS Group AG, as its prime brokers in a March performance update to investors.

Hong Kong’s Securities and Futures Commission last week commenced criminal proceedings against Segantii, Sadler and a former trader, Daniel La Rocca.

The regulator alleged they had insider information when trading shares of a locally listed company prior to a block trade in June 2017.

Segantii said it intends to defend itself vigorously against the charges.

Sadler, a former trader at Dresdner Kleinwort Wasserstein and Deutsche Bank AG, founded the firm in Hong Kong in late 2007 with US$26.5mil.

Segantii opened offices in London, New York and Dubai, and produced stellar investment returns from trading globally with a focus on Asia-Pacific equities and equity-linked securities.

The firm had US$4.8bil in assets under management at the end of March.

Block trades are off-exchange, privately negotiated transactions involving large amounts of publicly listed shares.

Banks handling the sales have to be careful not to let investors get wind of upcoming deals ahead of time, and bankers often resort to gauging demand for a stock by asking hypothetical questions.

Potential buyers can sometimes be given non-public information in a process dubbed “wall-crossing”, which limits their ability to trade on it. — Bloomberg
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JPMorgan Chase & Co is limiting dealings with Simon Sadler’s Segantii Capital Management Ltd, the Asian hedge fund giant charged with insider trading by authorities in Hong Kong, according to people familiar with the matter.