Einhorn Rapped For Insider-Trading

Jan 25 2012 | 1:52pm ET

British regulators today fined Greenlight Capital founder David Einhorn for insider-trading.

The Financial Services Authority ordered Einhorn to pay £7.2 million (US$11.2 million), including a £3.7 million fine. The agency said that Einhorn ordered Greenlight to sell its entire stake in Punch Taverns after learning that the company was about to announce a round of equity financing. At the time of Einhorn's order, Greenlight owned 13.3% of Punch's stock.

The FSA said that Einhorn learned on June 9, 2009, from a broker working for Punch that the company was near an equity fundraising. Einhorn then instructed his hedge fund to sell its stake. Greenlight didn't manage to dump the whole of it, selling 11.7 million shares to cut its stake in Punch to 8.9%. But the sale helped Greenlight avoid £5.8 million in losses after Punch announced its fundraising on June 15.

"Einhorn is an experienced professional with a high profile in the industry," the FSA's acting head of enforcement and financial crime, Tracey McDermott, said. "We expect someone in his position to be able to identify inside information when he receives it and to act appropriately. His failure to do so is a serious breach of the expected standards of market conduct."

Einhorn said he did not believe he was violating market abuse rules, a defense the FSA accepted with the caveat that the Punch tip "was inside information and Einhorn should have appreciated this." The Greenlight chief added that he still believes he did nothing wrong and agreed to the fine "rather than continue an arduous fight."

He added that Greenlight's investors would not bear any of the fine.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

As initial anxiety over Donald Trump’s victory gave way to market euphoria in the days following the election, there was a casualty. Gold prices.