Segantii Capital Management won a small victory ahead of its insider-trading trial, with a Hong Kong judge saying the firm can use key documents from Bank of America Corp as part of its legal defense — something the Wall Street bank had tried to block.
Judge Josiah Lam ruled that both the prosecution and defendants can use a report prepared by law firm Freshfields on behalf of the bank’s Merrill Lynch unit in the wake of the June 2017 block trade. They can also use the bank’s internal interview notes.
The ruling on Wednesday set the stage for the main trial next month against Segantii and its founder Simon Sadler and former trader Daniel La Rocca. The case is set to shed light on how large blocks of shares are traded off‑exchange, a process that often remains opaque to outsiders.
The court also ordered former Merrill Lynch trader Tony Psarianos to travel to Hong Kong to give witness testimony, rather than doing so via video link from his farm in Australia. Psarianos is a key witness in the trial, together with former colleague Anshul Trivedi.
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“Justice cannot be compromised simply for efficiency or convenience,” Judge Lam wrote in a judgment Wednesday. Psarianos’s claim that he needed to look after his farm “falls short of a proven sound reason for departure from the norm,” the judge said.
Psarianos, whose “evidence is no doubt of significance,” can appear later in the process, Judge Lam added. “There is still sufficient time for the SFC to persuade Mr Psarianos further and to advise or assist him to solve his farm issue, such as providing him with useful information about suitable farm-sitters.”
Merrill Lynch, represented by Wayne Walsh, previously said that Hong Kong’s Securities and Futures Commission “mistakenly” transferred some bank documents to the defense. The bank sought to prevent the documents from being admitted in the case, citing legal privilege.
Some information on how the trade progressed was only known to the bank and so was “fundamental” to Sadler’s defense, his lead counsel Clare Montgomery told the Hong Kong court in February. The defense lawyers already possess the Freshfields report but were trying to gain access to the Merrill Lynch internal interview notes.
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Judge Lam said that because Merrill isn’t a party to the criminal trial, he has no jurisdiction to compel it to unredact the submitted materials or provide documents the court ruled are disclosable but haven’t been handed to the SFC. Merrill can decide whether to surrender them, and if it refuses to do so, it’s up to the SFC to apply to a court for an enforcement order, the judge said.
The some 40 Bank of America-owned papers that the lender sought to block from court proceedings included records of internal interviews, self-reports and reports requested by the SFC, contact records with clients and material gathered during internal disciplinary proceedings.
The Segantii trial, which begins on May 4, is expected to last 25 days. Since the criminal proceeding started in 2024, the SFC has been tightening its scrutiny on how banks and investors communicate price-sensitive information ahead of block trades.
Segantii decided to shut down its hedge fund in May 2024 after the proceeding became public. Before that, it was often the first port of call for large block trades. At its peak in 2021, the firm oversaw $6.2 billion of assets, making it one of the largest Asia-based hedge funds by headcount and assets under management. Sadler was dubbed the “block trade king.”
