Segantii Capital Management Ltd has returned more than 90% of its client capital, according to people familiar with the matter, less than two months after the hedge-fund firm told investors that it would give them back their money.

The multistrategy hedge fund, which had US$4.7 billion in assets under management at the end of May, returned about a third of its capital last month, Bloomberg News reported earlier. The second repayment took place in the past few days, said the people familiar with the matter, who asked not to be identified discussing private information. A third and final installment is expected to take place by October.

Segantii didn’t respond to a message seeking comment.

Hong Kong-based Segantii, its founder Simon Sadler and ex-trader Daniel La Rocca have been accused of insider dealing ahead of a block trade in 2017. The city’s Securities and Futures Commission said in early May that it had commenced criminal proceedings against the trio. While the case has yet to go to trial, it has brought an abrupt end to Segantii’s 16-year run as one of the biggest and most consistent performers in Asia’s hedge fund industry.

Segantii started off with US$26 million in late 2007 and oversaw as much as US$6.2 billion in assets under management in 2021. The hedge fund focused on Asia-Pacific equities and equity-linked securities, and also traded globally. Segantii gained a reputation as Asia’s block-trade king and was the first port of call for many bankers looking to help clients sell large amounts of stock.

The insider-trading allegations unveiled by Hong Kong authorities in early May led some prime brokers to reassess their dealings with the hedge fund, and its investors requested to withdraw nearly US$1 billion. That prompted Segantii to suspend all redemptions on May 23, promising to return capital to all investors in an orderly manner. The fund was up 2.62% in the year through May 31, according to its monthly report.

Segantii employed around 150 people at the end of March in offices in Hong Kong, London, New York and Dubai. It has laid off scores of staffers since then, Bloomberg previously reported.

The insider trading case centres around Segantii’s sales of around US$1.14 million worth of shares in Hong Kong-listed fashion chain Esprit Holdings Ltd in June 2017. The hedge fund allegedly received information about an impending Esprit block trade from Tony Psarianos, a trader at Bank of America Corp’s Merrill Lynch unit at the time, according to court papers and regulatory records. Esprit shares fell in the days before and after a regulatory filing showed that Lone Pine Capital LLC, a US hedge fund firm, had sold a 10% stake in the company.

The three defendants initially appeared in a Hong Kong Magistrates’ Court in early May, before the case was moved to a District Court that can mete out a maximum seven-year prison sentence for insider trading. The hearing has been adjourned until Oct. 15.

  - Bloomberg