The UK Financial Services Authority has fined prominent U.S. hedge fund manager David Einhorn and his fund, Greenlight Capital Inc., £7.2 million ($11.34 million) for trading on inside information.

The FSA said Wednesday that it has decided to fine Einhorn (£3,638,000 including disgorgement), and Greenlight Captial (£3,650,795 including disgorgement), for engaging in market abuse.

The UK regulator says that in June 2009, Einhorn was part of a telephone conference in which it was disclosed by a corporate broker that a firm, Punch Taverns plc, was in the process of a significant equity fundraising.

Following the call, Einhorn began reducing Greenlight’s holding in Punch, which represented 13.3% of Punch’s issued equity. And when the company announced a fundraising of £375 million, its shares fell by 29.9%. The FSA says that Greenlight’s trading allowed it to avoid losses of approximately £5.8 million.

The FSA says it accepted that Einhorn did not believe that he was trading on inside information. However, it says this was not a reasonable belief. “Investment professionals are expected to handle inside information carefully regardless of whether they have been formally wall-crossed. This was a serious case of market abuse by Einhorn and fell below the standards the FSA expects, particularly due to Einhorn’s prominent position as president of Greenlight and given his experience in the market,” it says.

“Einhorn is an experienced professional with a high profile in the industry. We expect someone in his position to be able to identify inside information when he receives it and to act appropriately. His failure to do so is a serious breach of the expected standards of market conduct,” said Tracey McDermott, acting director of enforcement and financial crime at the FSA. “It is highly damaging to market confidence when privileged shareholders commit market abuse, and the high penalty reflects the seriousness of his breach.”