THE PUNCH Taverns case hinges on the interpretation of a term used by investment bankers: wall crossing.
A company or one of its advisers will ask a shareholder to wall cross for the purposes of marketing a deal to them, like an acquisition or a fund-raising.
If a shareholder agrees to be wall crossed it means that they can not trade in the shares of the company for a set period ahead of a transaction.
If a shareholder declines to be wall crossed, as in this case, an adviser “should stop the conversation there and then”, says Ruth Gevers, formerly of the FSA’s market conduct team.
The FSA said yesterday that a matter of minutes after a telephone conversation had concluded with a corporate broker, Einhorn gave instructions to sell all of Greenlight’s holding in Punch.
At this point the advisers in the room had a responsibility to make a Suspicious Transactions Report to the FSA.
Advisers on a deal, like Project Beetle, also have an insiders’ list which the FSA can ask for.