Following on from the disciplinary actions against David Einhorn and Greenlight Capital as reported in the January 27, 2012 edition of Corporate and Financial Weekly Digest, the UK Financial Servcies Authority (FSA) published final notices against two more individuals: Alexander Ten-Holter (a trader and former compliance officer at Greenlight Capital (UK) LLP) and Caspar Agnew (a trading desk director at JP Morgan Cazenove).
The FSA found that Mr. Ten-Holter took no steps to satisfy himself that a Greenlight order to sell shares in Punch Taverns plc (Punch) was not based on inside information “despite the clear risk that it was.” He simply executed the order, instructing Mr Agnew to sell Punch shares on behalf of Greenlight after the Greenlight analyst who gave the sell order told him certain facts that should have alerted him to the risk that Greenlight may have been in receipt of inside information.
The FSA found that Mr. Ten-Holter breached Statement of Principle 6 of the FSA’s Statements of Principle and Code of Practice for Approved Persons (APER). He failed to exercise due skill, care and diligence, despite his knowledge of the suspicious circumstances surrounding the transaction. Mr Ten-Halter was fined £130,000 (approx $205,400) and prohibited from performing the compliance oversight (CF10) and money laundering reporting (CF11) significant influence functions.
With respect to Mr. Agnew, the FSA finding was that he breached Statement of Principle 2 of APER because, having been instructed by Mr. Ten-Holter to sell Punch shares he should have to recognized that there were reasonable grounds to suspect that the transaction constituted insider dealing or market abuse. As a consequence, he failed to inform his compliance department of the possibility that the transactions were suspicious. This meant that no suspicious transaction report (STR) relating to the transactions was filed with the FSA. Mr. Agnew was fined £65,000 (approximately $102,700).
Tracey McDermott, FSA’s acting Director of Enforcement and Financial Crime, 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. Tackling market abuse and insider dealing is not just an issue for the regulator. Compliance professionals and staff on sales and trading desks play a key role in assisting the FSA in detecting and preventing market abuse. Approved persons should be in no doubt as to their responsibilities in this area and the FSA will not hesitate to take tough action where they fall down on these.”