Einhorn Asks SEC to Immediately Release Allied Capital’s Non-redacted Report

David Einhorn, the 41-year-old founder of Greenlight Capital, a $6 billion long-short value-oriented hedge fund, on Tuesday called on the SEC to release an unredacted report about an investigation into business development company Allied Capital Corp. (ALD).

DJ: “Given the dubious behavior of the regulators, we call upon the SEC to immediately release the non-redacted version of the report,” Einhorn said in a statement.

The heavily redacted 76-page report from the SEC’s Office of Inspector General says the SEC was slow to investigate “serious and credible” claims against Allied, and even says the commission looked into Allied’s allegations against “rival” Einhorn “without any specific evidence of wrongdoing.”

In 2002, Einhorn uncovered flaws in Allied’s accounting that valued certain assets of the company above the quoted market prices. According to Einhorn, Allied Capital, which invests primarily in small and private businesses, recorded writedowns only when it determined that money would be permanently lost.

In his 2008 book “Fooling Some of the People All of the Time”, Einhorn chronicles his Greenlight Capital hedge fund’s six-year public battle with Allied — some called it “the financial equivalent of Socrates vs. the Sophists” — as he shorted the company’s shares at $26.25, (ALD is currently trading at $4.82 p/sh. The pps of Allied Capital collapsed as the co. was revealed as fraudulent. Joan Sweeney by the way is still with the co.!!) eventually making a killing.

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