Broker Fined In Greenlight Insider-Trading Case

Feb 16 2012 | 10:51am ET

British regulators have fined the former Bank of America Merrill Lynch broker who spilled a juicy corporate secret to Greenlight Capital's David Einhorn.

Andrew Osborne was ordered by the Financial Services Authority to pay £350,000 (US$550,000) for giving Einhorn advanced word of an equity sale by Punch Taverns, just one day after the hedge fund manager had declined to talk about Punch with Osborne on a confidential basis.

According to the FSA, Osborne told Einhorn about the fundraising on June 9, 2009, leading the hedge fund manager to sell a chunk of Greenlight's 13.3% stake in Punch. The sale helped Greenlight avoid £5.8 million in losses after Punch announced the stock sale.

Einhorn was ordered to pay £7.2 million in restitution and fines last month. A former compliance officer at the firm and a JPMorgan Cazenove trading desk director were also fined.

"Osborne engaged in serious market abuse," FSA acting head of financial crime Tracey McDermott said. "He was trusted as the gatekeeper of inside information and should have been extremely cautious in proceeding with the call with Greenlight."

Like Einhorn, Osborne insists that he did nothing intentionally wrong and that the fine was not "a fair outcome."

"None of the many advisers of others involved in this transaction believed that any inside information had been passed by me at the time or raised any issues regarding the sale of shares by Greenlight," he said. "The FSA accepts that I did nothing deliberate, dishonest or reckless and at worst this was an error of judgment."

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


Hedge Funds Swarm Into Palm Beach

Oct 27 2016 | 2:32pm ET

As the first flakes of snow fall on New York's northern suburbs, Dan Weil of South...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...