Broker hit with penalty for disclosing inside information
The FSA has fined a former Merrill Lynch International corporate broker £350,000 for disclosing inside information ahead of a £375m equity fund-raising by Punch Taverns.
Ex-managing director in corporate broking Andrew Osborne acted on behalf of Punch and approached major shareholder Greenlight Capital.
On June 9, 2009, Osborne held a conference call between Punch management and Greenlight president David Einhorn.
During the call, Osborne disclosed inside information describing that Punch was at an advanced stage of the process towards a significant equity fundraising, probably to be launched within a week’s time.
The FSA says Osborne failed in his duties not to disclose inside information and to consider the risk of market abuse by improperly disclosing inside information to Greenlight.
After the call, Osborne became aware Greenlight was selling Punch shares but failed to raise any concerns with senior management, legal or compliance personnel.
On June 15, 2009, Punch announced a £375m fund-raising and the price of its shares fell by 29.9 per cent. Greenlight’s trading ahead of the announcement avoided losses of approximately £5.8m.
Last month, Einhorn and Greenlight trader and compliance officer Alexander Ten-Holter were fined a total of £7.4m for trading on the inside information.
JP Morgan Cazenove trading desk director Caspar Agnew was also fined £65,000 for failing to identify and act on a suspicious order from Greenlight.
FSA acting director of enforcement and financial crime Tracey McDermott says: “Osborne engaged in serious market abuse.”