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FSA Issues Major Insider Trading Fine
The Financial Services Authority has fined David Einhorn, and his hedge fund business, Greenlight Capital, a total of £ 7.2 million in relation to insider trading.
Mr. Einhorn will personally pay £ 3.6 million making this the second largest fine against an individual.
The issue concerns a telephone conference call on June 9th 2009 when Mr. Einhorn learnt that Punch was in the advanced stages of issuing new equity following information shared by the company’s broker.
Greenlight went on to sell shares in Punch following which their price fell 29 per cent. As a result, Greenlight managed to avoid a loss of £ 5.8 million.
Both Einhorn and Greenlight maintain that no laws were broken on the basis that a statement was made that they did not want to be “wall-crossed”. It would appear that this mechanism does not work in the UK.
This Monday’s Regulatory Update course will look into the FSA’s delving in the world of market abuse and seeks to draw lessons.
