Andrew Osborne is justified to feel hard done by. A single four-word remark in a long phone conversation has cost him a small fortune. The words were “something like 350 sterling”, an amount which bears a curious symmetry to the £350,000 fine which the FSA has just levied on him. Given his long years and senior position, he can probably pay it without having to eat bread and water, but it’s still pretty eye-watering. It also looks like rough justice, as he himself claims.

Osborne was a managing director at Merrill Lynch, the brokers with the unenviable task in 2009 of trying to restore financial stability to the pub chain Punch Taverns, a confection of debt built on a sliver of equity. For months, it had seemed odds-on that Punch would collapse, but the “dash for trash” in the spring that year propelled the share price up from 40p to around 160p, and offered a get-out-of-gaol opportunity.

As is sensible custom, Osborne sought the views of the biggest shareholders, a process which involved offering to make them insiders. The biggest, Greenlight Capital, rejected the offer, and the result was a desperately sticky conference call with David Einhorn, Greenlight’s boss. It was during this call that Osborne made his expensive remark. It set Einhorn off on a rant about shareholder value in a business which was valued at not much more than £350 million in the market.

Greenlight started selling Punch shares almost immediately, a move which saved it losses of £5.8 million, but which subsequently saw Greenlight fined a thumping £7.2 million by the FSA. Compliance officers at Cazenove and Greenlight were also fined. The punishment for Osborne  – who subsequently left Merrill – should mark the end of the affair, since he has not attempted to appeal it.

The 55-page document is a model for how the City really works. Punch’s plight demanded a major fund-raising, and the transcript of the conference call is painful to read. Osborne’s position was really impossible as soon as Einhorn had refused to be made an insider.  Even posing the question signalled that something major was up, and the call hardly justifies such draconian punishment. Unfortunately for Osborne, his sin of omission made things worse; when he learned that Greenlight was selling hard, he failed to react. Had he alerted the authorities immediately, the fine would surely have been much reduced.

Nobody emerges from the episode with much credit, but it’s worth noting that the Punch price only briefly allowed a big enough equity issue to restore some hope of financial stability. Apart from a rally in late 2009, the 100p a share issue price was never seen again. When Punch was finally broken up last year, it had drifted to around 70p. Osborne and Punch’s advisers really earned their fees; rough justice, indeed.

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