Alleged Rabbi Extortionist Implicated FrontPoint Manager

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.


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Controlling With Confidence: A ‘How-To’ For Hedge Fund Managers

Dec 22 2014 | 11:52am ET

Hedge funds are increasingly turning to third party services to help with operations...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.