The London financial services watchdog bared its teeth after Einhorn was caught "engaging in market abuse in relation to an anticipated significant equity fundraising by Punch Taverns Plc in June 2009."

"Einhorn is an experienced professional with a high profile in the industry," said FSA acting director of enforcement and financial crime Tracey McDermott in a statement Wednesday. "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."

One of the industry's best known short sellers, Einhorn is feted as the man who shorted Lehman Brothers Holding Inc. after warning about its financial health before its collapse in 2008.

Telling its story in a detailed statement, the FSA said that on June 9, 2009, Einhorn had been party to a telephone conference "in which it was disclosed to him by a corporate broker acting on behalf of Punch Taverns Plc" that the pub company was "at an advanced stage of the process" toward a significant equity fundraising.

"This was inside information and Einhorn should have appreciated this," the FSA said.

Just a few minutes after the telephone conversation had concluded, and on the basis of that inside information, Einhorn gave instructions to sell all of Greenlight's holding in Punch, the regulator said.

At the time, Greenlight held 13.3% of Punch's issued equity. Over the next four days, the firm sold 11,656,000 Punch shares, reducing its holding in the company from 13.3% to 8.89%.

On June 15, 2009, Punch announced a fundraising of £375 million. Following the announcement, the price of Punch shares fell by 29.9%.

Greenlight's trading had thereby avoided losses of roughly £5.8 million for the funds under Greenlight's management.

"The FSA accepted that Einhorn's trading was not deliberate because he did not believe that it was inside information," the statement added. "However, this was not a reasonable belief."

Einhorn's fine is £3,638,000 including disgorgement of financial benefit, and Greenlight's fine is £3,650,795 including disgorgement of financial benefit. The Punch securities were held in underlying funds managed by Greenlight.