The FSA has fined US hedge fund Greenlight Capital, owner David Einhorn and trader and compliance officer Alexander Ten-Holter a total of £7.4m for market abuse.
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.
On June 9, 2009, a corporate broker acting on behalf of Punch Taverns told Einhorn during a phone conference that Punch was at an advanced stage of the process towards a significant equity fund-raising.
The regulator says minutes after the phone conversation had concluded and on the basis of the inside information, Einhorn gave instructions to sell all Greenlight’s holdings in Punch. At the time these instructions were given, Greenlight held 13.3 per cent of Punch’s issued equity. Ten-Holter received the order to sell Greenlight’s shareholding in Punch. He was made aware Greenlight had spoken to Punch management minutes before its decision to sell.
The FSA says Ten-Holter took no steps to satisfy himself that the order was not based on inside information despite a clear indication that it was.
Over the next four days, Greenlight sold 11,656,000 Punch shares, reducing its holding in Punch from 13.3 per cent to 8.89 per cent.
On June 15, 2009, Punch announced a fundraising of £375m. Following the announcement, the price of Punch shares fell by 29.9 per cent. Greenlight’s trading avoided losses of about £5.8m for the funds under Greenlight’s management.
Einhorn was fined £3,638,000, including disgorgement of financial benefit, and Greenlight was fined £3,650,795, including disgorgement of financial benefit. Ten-Holter was fined £130,000 and banned from performing compliance and oversight and money-laundering reporting functions.
Agnew’s misconduct relates to his dealings with Green- light between June 9 and 12, when he was instructed by Ten-Holter to sell 11.4 million Punch shares.