Hedge-fund hotshot David Einhorn may have been hit with the largest bar tab in history after receiving an embarrassing slap on the wrist yesterday for “inadvertent” insider trading of a UK pub owner — casting clouds over his otherwise clean image.
Einhorn, the 43-year-old whiz kid, was told to fork over 7.2 million pounds, or $11.2 million, for trading ahead of a 2009 stock offering by British pub operator Punch Taverns.
The UK’s top financial regulator, Financial Services Authority, said Einhorn was given a heads up about the risky stock sale by Punch’s executives, prompting him to reduce his 13.3 percent stake in Punch to 9 percent, and save his fund firm, Greenlight Capital, 5.8 million pounds.
The FSA labeled the incident a “serious case of market abuse.” In a confusing twist, FSA also concluded that the sale was “not deliberate,” saying Einhorn “did not believe that it was inside information.”
Einhorn blasted the FSA’s findings yesterday in a conference call for a full 45 minutes.
“This is like a traffic cop on a quota at the end of the month with a miscalibrated radar gun,” he said of the FSA.
He only paid the fine because he doesn’t believe his US hedge fund would get a “fair hearing” in the British court system, he said.
On June 15, 2009, Punch Taverns, which trades on the London Stock Exchange, issued newstock in an effort to raise 375 million pounds.
Six days earlier, Einhorn had talked with Punch’s executives about the company’s plans, including the possibility of an equity raise.
Two minutes after the call ended, Einhorn ordered a Greenlight analyst to sell the fund’s entire stake, FSA said.
Einhorn said the sale was based on the CEO’s revelation that the stock was fairly valued despite it trading at a “deep discount to the company’s books.” He said nobody on the call indicated that what had been discussed wasmaterial or nonpublic information.
kwhitehouse@nypost.com