FSA issues further fines in Einhorn insider trading case

The Financial Services Authority (FSA) has fined a former compliance officer at David Einhorn's Greenlight Capital and a trader at JP Morgan Cazenove for insider trading and market abuse.

Alexander Ten-Holter of Greenlight was fined £130,000 for failing to question and make reasonable enquiries before selling Greenlight's shareholding in Punch Taverns before a significant equity fundraising by Punch in June 2009.

The FSA said this meant Ten-Holter was unable to perform compliance oversight and money laundering reporting functions.

Caspar Agnew, trading desk director at JP Morgan Cazenove, was fined £65,000 for failing to identify and act on a suspicious order from Greenlight to sell Punch shares.

This led to the firm being used to facilitate insider dealing or market abuse, the FSA said.

On Wednesday the FSA fined Einhorn and his hedge fund £7.2m for trading on the inside information. Einhorn was fined £3.64m and Greenlight Capital £3.65m, the former describing the decision as "unjust and inconsistent with the law".

In 2009, Ten-Holter was ordered to sell all of Greenlight's shareholding in Punch, despite being aware Greenlight had spoken to Punch management moments before the decision to sell.

The Greenlight analyst who gave the sell order told Ten-Holter said Punch management would have told them "secret bad things" if they had signed a confidentiality agreement.

The analyst also told Ten-Holter they had a week to sell before the Punch stock "plummeted" in value.

The FSA said at this point Ten-Holter should have realised Greenlight could have received inside information and taken steps to check.

Instead, he ordered Agnew to sell 11.4m Punch shares. Agnew carried out the transaction and failed to act with due care and diligence since he was aware of the possibility of insider trading, the FSA said.

Days later, Punch announced a fundraising operation of £375m and share prices fell by 29.9%.

By selling in advance, Greenlight had avoided a loss of £5.8m on Punch stock.

Tracey McDermott, acting director of enforcement and financial crime at the FSA, said: "Ten-Holter's approach to compliance oversight was wholly inadequate.

"Serious compliance failures of this nature can have a dramatic effect on the orderliness and integrity of the markets.

"Agnew was an experienced trader, so should have been suspicious of this transaction and aware of his responsibilities to report it."

"Alex is a valued member of the Greenlight team and our trader in the UK. We believe that the FSA's action against him is unwarranted. He has our full support," Greenlight said in a statement.