Insider Dealing – The case against Segantii Capital Management Limited and certain officers

On 2 May 2024, the Securities and Futures Commission (“SFC”) announced that it has commenced criminal proceedings against Segantii Capital Management Limited (“Segantii”), its director and chief investment officer Mr Simon Sadler, and former trader Mr Daniel La Rocca (together, the “Officers”) for the offence of insider dealing in the shares of a company listed on the Stock Exchange of Hong Kong Limited prior to a block trade in June 2017.

On 12 June 2024, the Eastern Magistrates’ Court granted an application by the Department of Justice to transfer the case against Segantii and the Officers to the District Court. The first hearing in the District Court is scheduled to take place on 2 July 2024.

Commentary

The ongoing case against Segantii and the Officers highlights the possible consequences of dealing in, or procuring another person to deal in, any listed securities when you are in possession of inside information unless one of the relevant defences apply. The offence of insider dealing carries a maximum penalty of 10 years imprisonment and a fine of HK$10,000,000.

The Department of Justice’s intention for transferring the case to the District Court is likely due to the difference in the maximum sentence that can be imposed against Segantii and the Officers in the Magistrates’ and District Court and appears to demonstrate the seriousness with which they are treating this case. The Magistrates’ Court may impose a maximum sentence of 2 years imprisonment for a single offence (and up to 3 years imprisonment where there are two or more indictable offences being dealt with at the same time), whereas the District Court may impose a maximum sentence of 7 years imprisonment.

Russell Bennett and John Lee

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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication. This article was last updated on 14 June 2024.