A Gift for David Einhorn

It’s been a somewhat less rough year for David Einhorn and his Greenlight Capital than for some of his peers, but being more right than he ever dreamed on Lehman, the publication of his book ‘Fooling Some of the People All of the Time’ and taking down a poker tournament barely begins to silver-line the cloud of his funds being down 20 per cent more or less through the end of November.

But this little nugget from the latest Semiannual Report to Congress by the US Securities and Exchange Commission’s inspector general should cheer him up, at least a little.

Allegations of Unauthorized Disclosure
by Former Employee and Improper
Enforcement Investigation

The OIG has a pending investigation into an allegation made in a recently-published book that a former SEC attorney may have taken confidential investigative materials with him when he left the Commission and provided those materials to a company he went to work for as a lobbyist. It was also alleged in the book that the SEC failed to conduct an adequate investigation after the author presented evidence of fraud by an affiliate of this company and instead investigated the complainant for spreading negative views about the company. The OIG has obtained and reviewed the book containing the allegations, as well as other relevant documents. The OIG plans to conduct a thorough investigation into the allegations of unauthorized disclosure and improper investigation.

“A thorough investigation” isn’t “Hairball locked up for the rest of his unnatural.” But it is, years after Einhorn first drew attention to the outright crookery at Allied Capital Corp, a start.

Semiannual Report to Congress

SEC Office of Inspector General

Apr. 1-Sep. 30 2008 (see P. 68 (.pdf numbering))

Related:

Still, the Crooks be Winnin’

NakedShorts Aug. 8 2008

David Einhorn: Back. In. The. Game

Dealbreaker Nov. 4 2008

Comments

[Anthony Alfidi:]

Congrats to Mr. Einhorn for calling it right on at least two crooked financial firms. If the rest of the hedge fund industry could perform as much due diligence as him, people like Bernard Madoff couldn't raise a penny in capital.

2008 Dec 24 02:27 AM