The UK Financial Services Authority (FSA) has fined GBP7.2m David Einhorn, owner of the US hedge fund Greenlight Capital (Greenlight), and his fund for trading on inside information in Punch Taverns in June 2009.
FSA has accused Einhorn for engaging in market abuse when information regarding a significant equity fundraising of Punch Taverns was disclosed to him.
Based on the information, Einhorn sold Greenlight’s holding in Punch and avoided losses of GBP5.8m for the funds.
The Punch securities were held in underlying funds managed by Greenlight.
Though the act was not deliberate, according to acting director of enforcement and financial crime Tracey McDermott Einhorn was expected to be able to identify inside information and that he failed to meet the expected standards of market conduct.
"It is highly damaging to market confidence when privileged shareholders commit market abuse, and the high penalty reflects the seriousness of his breach," McDermott added.
Einhorn has been fined GBP3,638,000 including disgorgement of financial benefit and Greenlight was charged a fine of GBP3,650,795 including disgorgement of financial benefit.