The Corner

Billionaire Democratic Donor Targets Business Blogger

David Einhorn, a hedge fund manager who has paid out multimillion-dollar fines and settlements over insider trading charges and the New Century subprime lending debacle, is seeking a court order forcing the popular financial site Seeking Alpha to out one of its expert contributors.

Einhorn, who has given nearly $230,000 of his estimated $1.2 billion fortune to mostly Democratic political groups and candidates since 2000, wants Seeking Alpha to name a pseudonymous blogger who revealed in November that Einhorn’s Greenlight Capital had taken a stake in Micron Technology.

Under the nom de plumeValuable Insights,” the blogger, described as a tech analyst and “fund manager with almost 20 years’ investment experience,” revealed Einhorn’s stake during an exchange with a reader. Einhorn is petitioning the New York State Supreme Court to force the Tel Aviv-based site to cough up the identity of @valinsights. The New York Times’ Andrew Ross Sorkin helpfully notes that Valuable Insights’ publication of Greenlight’s stake “made it more expensive to buy” shares in Micron, a point Greenlight raised in its court filing.

Einhorn at the time was seeking special confidentiality treatment from the Securities and Exchange Commission.

Sorkin calls Einhorn a “longtime champion of transparency,” which in practical terms means he wrote a book a few years ago called Fooling Some of the People All of the Time, presumably because the title With Wings As Eagles had already been taken. In that book, Einhorn details his six-year crusade against Allied Capital, a firm he sold short in 2002 in the (correct) belief that Allied’s accounting was faulty and its illiquid stocks misvalued.

Fooling is written in a paranoid, personal style that turned out to be justified. An internal SEC investigation later revealed that a high-level SEC employee was in league with Allied and may have caused the SEC to slow-walk its probe of Allied, in addition to putting Einhorn himself briefly in the crosshairs of both the federal regulator and Tartuffian then-New York Attorney General Eliot Spitzer.

Einhorn has not stayed out of ethical trouble himself. In 2012 he paid a £7.2 million fine to the British Financial Services Authority over insider trading (an invented offense designed to procure convictions in cases when the government cannot prove in court that the actual crime of fraud occurred).

Einhorn was also a director of the real estate investment trust New Century Financial Corp. until March 2007, when that subprime lender began its monthlong slide into bankruptcy.

The company’s collapse meant that it could not be named as a defendant in a subsequent class-action lawsuit by New Century investors against the company’s officers, underwriters and auditor. But Einhorn and more than a dozen other New Century directors were named as individual defendants in the suit [pdf], which ended in a settlement that the Los Angeles Times estimated in June 2010 came to $90 million. A Reuters report the following month put the total at $125 million, with the New Century officers’ share coming to $65.1 million. (Einhorn was not among three New Century executives required to pay an additional $1.5 million in a separate SEC lawsuit that year.)

Among Einhorn’s political donations in the 2012 election cycle: $15,000 to the Murphy-Heitkamp Victory Committee; $12,000 to ACTBLUE; $5,000 to Gillibrand for Senate; and $5,000 for Friends of Mark Warner.

Seeking Alpha has not commented but provides a guideline for anonymous contributions on its site.

Greenlight Capital declined to comment to National Review.

* This post has been revised to correct details of the two New Century lawsuits and to correct the spelling of a proper name.


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