Simon Sadler: Blackpool’s block trade king

"Sadler’s $6bn hedge fund Segantii Capital has bought into the biggest deals and generated colossal fees for banks, making it a “priority customer” on Wall Street, according to a former prime broker in Hong Kong. A low-profile but lucrative corner of the finance industry, block trades are stock sales big enough to depress a company’s share price, meaning banks arrange them privately away from exchanges. US authorities are investigating how Wall Street banks handle the privately-negotiated sales, unsettling a market not accustomed to the spotlight. Suddenly, banks are becoming more risk averse. Last week, the Financial Times revealed that two of Segantii’s banks had cut off their previously-treasured client, preventing the hedge fund from trading equities with them globally. One of the banks also closed all of its accounts, including in prime brokerage and trading other financial products. At Bank of America, concerns among the investment bank’s markets supervision team in New York in early 2021 about trading by Segantii around blocks of shares placed on public markets by other banks led to an internal worldwide directive to sever ties with the hedge fund, according to two people familiar with the matter. The edict was “an extremely rare event for a fund of this size with a big name”, according to one of the people who is close to the bank."

Thoughts? No wrongdoing has been cited.