Wednesday, 23 July 2014
Last updated 14 hours ago
Nov 10 2010 | 4:07am ET
While Milton Balkany is on trial for trying to extort money from SAC Capital Advisors founder Steven Cohen, he may have had better luck with FrontPoint Partners' Joseph Skowron.
Balkany, a Brooklyn Orthodox rabbi, is on trial for trying to shake down Cohen for $4 million in exchange for the silence of an imprisoned congregant who claimed to have information about insider trading at SAC. There is no evidence that Balkany's contact actually had any information about illicit dealing at the hedge fund giant, and SAC immediately contacted—and cooperated with—the authorities in catching the rabbi.
But in one case, Balkany's insider-trading allegations may be coming true.
In a conversation with a federal investigator probing Balkany's alleged extortion attempt, the rabbi said that Skowron, the lead portfolio manager of FrontPoint's health care hedge funds, received and sold confidential tips on drug trials.
"This Skowron not only did it for himself, he sold it to others," Balkany said in a taped phone conversation with the investigator.
"He's still actively doing this," the rabbi added. "I mean, he's been doing it for many years."
FrontPoint placed Skowron on leave last week after U.S. authorities arrested French doctor Yves Benhamou and charged him with passing insider tips on to several hedge funds. FrontPoint, which is in the process of spinning off from Morgan Stanley, acknowledges that its health care funds are among the unidentified funds mentioned in the Benhamou case.
Neither FrontPoint nor Skowron has been charged with any wrongdoing.
It is unclear how Balkany might have learned of alleged insider trading at FrontPoint. But the Securities and Exchange Commission has been investigating the firm's health care trades since 2008.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…