David Einhorn, founder and manager of Greenlight Capital, was fined today by British regulators. “The Financial Services Authority ordered Einhorn to pay £7.2 million (US$11.2 million), including a £3.7 million fine, reports FINAlternatives. “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 Einhorn made his call, “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 sold 11.7 million shares, cutting its stake in Punch to 8.9% and, in doing so, avoided “£5.8 million in losses after Punch announced its fundraising on June 15.” Einhorn said he did not believe he was violating market abuse rules. He said that he still believes he did nothing wrong and agreed to the fine “rather than continue an arduous fight.” The FSA accepted this while saying that the Punch tip “was inside information and Einhorn should have appreciated this.”
Einhorn said that Greenlight’s investors would not bear the burden of the fine.