HONG KONG Hong Kong's securities regulator started an insider dealing prosecution against hedge fund Segantii Capital Management, its founder and a former trader, the watchdog said on Thursday.

The Hong Kong Securities and Futures Commission (SFC) said it had started criminal proceedings against Segantii, its founder and chief investment officer Simon Sadler, and former trader Daniel La Rocca for insider dealing in the shares of a Hong Kong-listed company prior to a block trade in June 2017.

"Segantii intends to defend itself vigorously against the charge," a company spokesperson said. The two defendants could not be contacted.

Sadler, a British businessman, is also the owner of his hometown football club, Blackpool Football Club.

Established in 2007, Segantii is one of the oldest and biggest hedge funds in Asia. Its flagship Asia-Pacific Equity Multi-Strategy Fund was up 2.5% in the first quarter, after a 1.6% decline in 2023, according to a fund's monthly letter seen by Reuters.

The fund managed about US$4.8 billion at the end of March, the letter said.

Segantii, one of Hong Kong's most high-profile hedge funds, also has operations in London, New York and Dubai, according to its website.

The two defendants appeared at Hong Kong's Eastern Magistrates' Court on Thursday morning, no plea was taken and the case was adjourned to June 12, the SFC said in a statement.

Sadler and La Rocca were released pending the next hearing under certain conditions, including cash bail of HK$1 million and HK$500,000 respectively, the SFC added.

Segantti has witnessed an acceleration of staff departing the firm this year, according to licence records on the SFC's website. La Rocca left the firm in March after working there for more than 10 years.

  - Reuters