The Financial Services Authority has fined Andrew Osborne, former managing director in corporate broking at Merrill Lynch International (now Bank of America Merrill Lynch International) £350,000 ($550,000), for engaging in market abuse by improperly disclosing inside information ahead of equity fundraising by Punch Taverns in June 2009.

Osborne acted on behalf of Punch and approached Greenlight Capital, a major shareholder at the time. Greenlight refused to be wall-crossed yet on 9 June 2009 Osborne proceeded with a conference call between Punch management and David Einhorn, president of Greenlight.

During the call, Osborne disclosed inside information on the equity fundraising. While the FSA accepted Osborne’s actions were not deliberate, this was a serious case of market abuse which undermined the integrity of the market and damaged market confidence.

Shortly after the call, Osborne was aware that Greenlight was selling Punch shares.  He failed to raise concerns with senior management, legal or compliance personnel or take any steps to address the risk of market abuse. 

On 15 June 2009, Punch announced an equity fundraising of £375 million and the price of its shares fell by 30 per cent. Greenlight’s trading ahead of the announcement avoided losses of approximately £5.8 million.

As reported in this publication, Einhorn, Greenlight and others have already been subject to FSA fines.