News of David Einhorn’s Greenlight Capital suing the web site Seeking Alpha, which started as a headline on the Bloomberg terminal and a post of legal documents obtained by ValueWalk, quickly raced around Twitter and ultimately blew up into a larger issue Friday, as media outlets scrambled to cover the news.
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Hedge fund manager Einhorn suing media outlet for source name
The issue began as a headline on the Bloomberg terminal shocked readers with “David Einhorn’s Greenlight Capital Sues Seeking Alpha Website.” The detailed story, revealed minutes later when ValueWalk published court documents it had received, had a slightly different shade. It showed Einhorn was suing the web site to reveal the identity of a user who posted confidential details about Einhorn’s position and not to receive monetary damages.
In the court documents published by ValueWalk, Einhorn claims that publishing the hedge fund’s holdings of Micron securities during the fourth quarter of 2013 cost the fund because it ultimately drove up the price of shares. On Nov. 14, seeking to keep its holdings confidential, Greenlight had requested confidential treatment from the Securities and Exchange Commission. When the information was published by Seeking Alpha, Greenlight alleges in its suit that it could have only come from a person who had confidential access to the fund. The disclosure on Seeking Alpha, filed by a person under the pen name “Valuable Insights,” had a stake in Micron and financially benefited from the rise in the stock’s value. Micron’s stock price moved higher after the post, from $18.92 on Nov. 13 to $19.46 on Nov. 15. Einhorn ultimately disclosed his position in Micron on Nov. 21 at an investment conference in New York.
For its part, Seeking Alpha has declined to identify the poster, but the profile on the web site says Valuable Insights is a “fund manager with more than 20 years of experience in the securities industry.”
Media watchers say the case could be interesting as it approaches freedom of the press territory. The key question going forward is: will Seeking Alpha protect its source, in this case a member of the web site who disclosed confidential information, or will Einhorn prevail?