Former Hedge Fund Trader Linked to Insider Trading Scandal Involving Morgan Stanley

Robert Gagliardi, a former trader at Segantii Capital Management, has been linked to a series of insider trading activities involving block trades, according to a report from the Financial Times. Legal documents filed by Nevada-based hedge fund Evolution Capital Management, where Gagliardi worked briefly in 2021, reveal that the trader was implicated in trades from 2018 to 2021, where investors allegedly made profitable bets based on confidential information from Morgan Stanley bankers.

During the period in question, Gagliardi was employed at Segantii, a Hong Kong-based hedge fund, before moving to Evolution in April 2021. Segantii itself is facing a separate insider trading case filed by Hong Kong’s Securities and Futures Commission, although this is unrelated to Gagliardi’s activities.

Evolution’s court filings describe a close relationship between Gagliardi and Pawan Passi, the former head of Morgan Stanley's US equity syndicate desk, with Gagliardi reportedly referring to Passi as his "daddy." The hedge fund also connects Gagliardi to short positions against companies like Canada Goose, Medpace, and Invitation Homes.

The controversy came to light after Gagliardi filed a lawsuit against Evolution in London, seeking a $7.5 million bonus for generating high returns. Evolution countered, citing his alleged involvement in the insider trading activities as grounds to withhold the bonus and to reclaim $7 million paid to him during his brief tenure.

Passi and Morgan Stanley were both charged by the SEC in connection with the case, with the latter agreeing to a hefty $249 million fine. However, no traders have been specifically charged for executing trades based on the insider information. Gagliardi's legal team is expected to respond to Evolution's claims by 5 July.