Bloomberg News

Ex-Merrill Broker in Einhorn Insider Case Said to Face U.K. Fine

January 26, 2012

Jan. 26 (Bloomberg) -- A former corporate broker at Bank of America Corp.’s Merrill Lynch, facing an investigation over inside information given to Greenlight Capital Inc. Chairman David Einhorn, may be fined 350,000 pounds ($550,000) by the U.K. finance regulator, a person familiar with the matter said.

Andrew Osborne, the former broker, faces the fine as part of a Financial Services Authority civil probe, according to the person who declined to be identified because they weren’t authorized to speak on the matter. Osborne may have told Einhorn, 43, that Punch Taverns Plc planned to raise equity a week before it was announced to the market in 2009, according to the person.

Einhorn ordered traders to sell shares in Punch Taverns “within minutes” of getting the information, the FSA said yesterday. Greenlight and Einhorn, who said the market abuse was “inadvertent,” were fined 7.2 million pounds by the regulator yesterday. Osborne, who wasn’t identified by the FSA, may challenge the penalty at a tribunal, the person said.

A call made to Osborne’s former office at Bank of America wasn’t answered. John McIvor, a London spokesman for the Charlotte, North Carolina-based bank, declined to comment and declined to provide contact details for him. Osborne is listed on the FSA’s register as being “inactive” since Nov. 30 and an Internet and a directory assistance search found no phone listing for him.

The FSA declined to comment on the fine or to provide contact details for Osborne. The amount of the fine was reported earlier today by Sky News.

Firm X

According to the FSA, a week before Punch announced the sale, some shareholders and potential investors were notified of the offering by a company the FSA referred to as “Firm X.” The firm contacted Greenlight about the Punch issuance, and Einhorn declined to discuss it on a “wall crossed” basis, where it’s agreed to share inside information on the condition that it’s not acted on, the regulator said.

The following day, a corporate broker from Firm X and Punch management had a 45-minute conference call with Einhorn, during which inside information was disclosed to him, the FSA said. Goldman Sachs Group Inc. and Merrill Lynch arranged the share sale, according to a filing at the time of the stock offering.

The 3.64 million-pound fine against Einhorn is the second- largest civil penalty levied against an individual by the FSA after a $9.6 million fine against Dubai-based investor Rameshkumar Goenka in November. The FSA said Einhorn’s trade wasn’t deliberate or reckless.

--With assistance from Zijing Wu in London. Editors: Anthony Aarons, David Scheer

To contact the reporters on this story: Lindsay Fortado in London at lfortado@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.


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