(Updates with Greenlight comment in fifth paragraph.)
Jan. 27 (Bloomberg) -- Employees at Greenlight Capital Inc. and JPMorgan Chase & Co.’s Cazenove unit were fined in a second wave of U.K. sanctions over Greenlight’s sale of Punch Taverns Plc shares in 2009.
Alexander Ten-Holter, the hedge fund’s former compliance officer, was fined 130,000 pounds ($204,000) for failing to “make reasonable enquiries” before selling the firm’s holding, the Financial Services Authority said in a statement today. Caspar Agnew, a Cazenove trader, was fined 65,000 pounds for failing to identify and report a “suspicious order.”
Greenlight Capital and its chairman, David Einhorn, were already fined 7.2 million pounds by the U.K.’s FSA, which included the regulator’s second-largest fine for an individual. Andrew Osborne, a former corporate broker at Bank of America Corp.’s Merrill Lynch, also faces a fine of 350,000 pounds in the investigation, a person with knowledge of the matter said yesterday.
“Ten-Holter’s approach to compliance oversight was wholly inadequate,” Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said in an e-mailed statement. “Serious compliance failures of this nature can have a dramatic effect on the orderliness and integrity of the markets.”
Greenlight said that Ten-Holter continues to have the hedge fund’s full support.
“Alex is a valued member of the Greenlight team and our trader in the U.K.,” Greenlight said in an e-mailed statement. “We believe that the FSA’s action against him is unwarranted.”
Agnew didn’t “act with due skill, care and diligence,” in failing to report the trade as suspicious, the FSA said. He “thought that Greenlight was simply fortunate in the timing of its transactions.” The regulator said that his “integrity is not questioned in any way.”
Kate Haywood, a spokeswoman for JPMorgan in London, declined to comment today. Agnew and Ten-Holter didn’t respond to e-mail messages seeking comment. A number for Osborne couldn’t be located and Bank of America declined to comment or provide contact details for him yesterday.
Einhorn, Greenlight’s 43-year-old chairman, was told of Punch Taverns’s plan to sell equity by a broker representing the company, the FSA said in an e-mailed statement on Jan. 25. He then sold more than 11 million Punch Tavern shares over the following four days, avoiding losses of about 5.8 million pounds for the fund, the regulator said.
“I didn’t believe in 2009, and I don’t believe now, that there was anything wrong with our conduct,” Einhorn said after the FSA fine.
Greenlight, wholly owned by Einhorn, had around 31 employees in 2009, according to the FSA. The $7.8 billion Greenlight Capital LP fund returned 2.9 percent last year and has produced annualized returned of 20 percent since the fund started in May 1996, according to a letter sent to investors.
--With assistance from Jesse Westbrook, Ambereen Choudhury and Kit Chellel in London. Editors: Anthony Aarons, Steve Bailey
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