26/01/2012 - FSA Fines US Hedge Fund 7 Million
FSA Fines US Hedge Fund 7 Million.
During a phone call in June 2009 from a corporate broker acting on behalf of Punch Taverns, is was disclosed that Punch was at an advanced stage of the process towards a considerable equity fundraising. Following this phone call, Einhorn gave instructions to sell all of Greenlight’s holding in Punch and over the next 4 days Greenlight sold 11,656.000 Punch shares, reducing its holding down to 8.89%.
On June 15, 2009, Punch announced a fundraising of £375m. Following the announcement the price of Punch shares fell by 29.9% and Greenlight’s trading avoided losses of approximately £5.8m.
According to the FSA, the information Einhorn received was inside information and they would have expected Einhorn to identify it as inside information due to him being an experienced professional and given his experience in the market.
This was a serious case of market abuse by Einhorn and he was fined £3,638,000 including disgorgement of financial benefit and Greenlight was fined £3,650,795 including disgorgement of financial benefit.
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