David Einhorn – a well known poker player and Hedge Fund Manager has been fined by the US Financial Services Authority (FSA) of insider trading and fined £7.2 million.
David Einhorn who came 18th for $659,730 in the 2006 WSOP Main Event is better known as a famous and controversial Hedge Fund Manager – using tactics that have served him well on and off the poker tables.
The Financial Services Authority (FSA) have accused David Einhorn of using insider knowledge to make huge profits for his company Greenlight. The reason that David Einhorn is controversial is that he does not just go short on company shares (that their price will drop quickly in a short space of time) but he helps them to with public statements and attacks on the very companies he is betting on their share price falling!
He shot to fame in the spring of 2008 when he used two prominent Wall Street conferences to question the financial health of Lehman Brothers. The attack on Lehman echoed a pattern seen earlier in Mr Einhorn’s career in which he would publicly question the health or practices of a company while shorting its shares
Inside information is great to know and so is poker inside information on what an opponent can do or is thinking, so maybe this will help those playing against David Einhorn work out what he is up to?
David Einhorn – Fooling Some of the People All of the Time?
David Einhorn wrote a book about selling companies short called Fooling Some of the People All of the Time. But it looks like all his activities have caught up with him and the FSA were not fooled in the long run by him.
Evening London Standard
Einhorn is 39 but looks like he just left college. He founded Greenlight Capital in 1996 with less than $1 million. It now has around $6 billion under management and its investors have made, on average, better than 25 per cent on their money every year since it started.
Einhorn already knows what it is like to feel the hot breath of the regulators on his neck. Six years ago he made a speech at a conference, slamming a financial company called Allied Capital.
There were suspicions he was shorting the company’s stock and conspiring with other investors to drive it down. Eliot Spitzer, then New York’s attorney-general, launched an investigation. Allied, it emerged later, put their own investigators on to the case and, at one point, stole Einhorn’s phone records.
No conspiracy was proved and Einhorn had the last word when he published a book, Fooling Some of the People All of the Time, which explored the issue and his philosophy of selling a company short. It came down to this: if a company’s share price is overvalued, it is a legitimate target.
David Einhorn has defended himself but has capitulated to the insider trading accusations and fine by the FSA when he was quoted as saying
Mr Einhorn called the fine “unjust” and “inconsistent with the law” but said he would pay it “rather than continue an arduous fight”.