Two senior City executives, one of them a JPMorgan Cazenove trader, were yesterday fined for their role in the insider dealing scandal that saw billionaire hedge fund manager David Einhorn and his firm Greenlight Capital fined £7.2m earlier this week.
Caspar Agnew, a trading desk director at JPMorgan Cazenove, was fined £65,000 by the Financial Services Authority for failing to identify and act on a suspicious order from Greenlight to sell shares in the pub group Punch Taverns that allowed the broker to be used to facilitate insider dealing or market abuse.
The FSA said that as a result of Mr Agnew's failure, JPMorgan Cazenove had itself failed to alert the regulator to the suspicious trade. Alexander Ten-Holter, a trader and former compliance officer at Greenlight's UK arm, was fined £130,000 for not questioning the order he was given to sell the hedge fund's entire stake in Punch shortly before it announced a massive fundraising. Mr Ten-Holter has also been banned from working in any role in the City involving oversight of compliance or money laundering.
The FSA said that he had been told by Greenlight's own analyst that the firm had been talking to Punch's management minutes before the sell order was issued. It added: "The Greenlight analyst who gave the sell-order told Mr Ten-Holter that Punch management would have told them 'secret bad things' had they signed a confidentiality agreement and the analyst thought that Greenlight had potentially a window of a week before the stock 'plummets'."
Mr Ten-Holter took no steps to satisfy himself that the order was not based on inside information, said the FSA. In fact, Greenlight had received inside information in the course of the call with Punch management and had based its decision to sell on that inside information. Mr Ten-Holter simply executed the order.
Tracey McDermott, the 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."
Greenlight Capital said: "Alex is a valued member of the Greenlight team and our trader in the UK. We believe the FSA's action against him is unwarranted." Mr Agnew was not available for comment.Reuse content