High profile hedge fund manager David Einhorn and his firm Greenlight Capital, have been fined £7.2m by UK regulators for trading ahead of a 2009 equity fundraising by Punch Taverns.
Einhorn is the biggest name to date to be investigated by the UK Financial Services Authority. His personal fine, £3.6m, is the second largest ever meted out by the FSA to an individual for market abuse.
According to the watchdog, Mr Einhorn, 43, was involved in a phone call on 9 June 2009 with Punch Tavern’s broker and management in which he was told the pub and bar operator was in the advanced stages of issuing new equity which would consequently lower its share price.
Greenlight subsequently sold 11.65m shares of the firm, reducing its stake in the pub company from 13.3 percent to just under 9 percent. Upon the announcement of the transaction Punch shares fell 29 percent meaning Greenlight’s funds avoided a loss of £5.8m.
The FSA’s is stepping up its attempts to hold market professionals to account, in line with US regulators.
Mr Einhorn said in a statement: “We believe that this action is unjust and inconsistent with the law and with prior FSA enforcement precedent. However, rather than continue an arduous fight, we have decided to put this matter behind us and concentrate on managing our business.”
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