David Einhorn and his firm, Greenlight Capital, have been fined £7.2m by UK regulators for trading ahead of a 2009 equity fundraising by Punch Taverns.Mr Einhorn will personally pay £3.6m.
According to the watchdog, Mr Einhorn, 43, participated in a phone call on June 9 2009 with Punchâ??s broker and management in which he was told the pub company was in the advanced stages of issuing new equity, a step that would almost certainly drive down its share price.
Over the next four days, Greenlight sold 11.65m shares of the firm, reducing its stake in the pub company from 13.3 per cent to just under 9 per cent. When the transaction was announced, Punch shares fell 29 per cent, so Greenlightâ??s funds avoided a loss of £5.8m.
The case is a key step in the FSAâ??s campaign to hold market professionals to account and to tackle the high rates of suspicious trading ahead of mergers and rights issues. In 2009, abnormal trading patterns preceded 30 per cent of UK takeovers. But it also highlights the difficulties of enforcing UK standards in an increasingly global marketplace.
