Einhorn hits back at FSA over £7.2 million fine

Hedge fund manager David Einhorn has lashed out at the Financial Services Authority (FSA) for fining him over market abuse, denying any wrongdoing in his hedge fund’s trading ahead of a 2009 equity fundraising by Punch Taverns, according to reports.

The watchdog ordered Einhorn (pictured) and his firm, Greenlight Capital, to pay £7.2 million for reducing his stake in the pub company from 13.3% to just under 9% following a phone call with management in which he learnt Punch was planning to issue new equity.

Business Insider though has reported that Einhorn said he only learnt about the firm’s plans in ‘general terms’ and not ‘specifics’, and had declined to sign a non-disclosure agreement that would have made him privy to inside information.

He is reported as saying that he wanted to make sure he was not only following just the letter of the law, but also the ‘spirit’ of the law. ‘This FSA action is indeed truly frightening,’ he said, according to Business Insider.

Einhorn, one of the world’s highest profile hedge fund managers, reportedly said he told his firm to sell the shares after asking Punch’s chief executive what he thought the stock was currently worth, and was told in response that the price was ‘fair’.

‘This was an extraordinary statement... the chief executive was not in the position of telling shareholders the stock is “fully valued”,’ he was quoted as saying. ‘We were talking about a stock that was trading at a deep discount to the company's book value – down substantially.’

According to the report, he was also shocked when the chief executive told him the company would need to raise $350 million to manage the company's risk.