UPDATE: FrontPoint Cuts More Than 10% Of Staff

Dec 13 2010 | 12:42pm ET

Faced with huge redemptions, FrontPoint Partners laid off 28 staff members on Friday, a spokesman said.

For a firm that employed 219 people as of the end of September, that amounts to a headcount reduction of more than 10%. The firm was recently spun off from Morgan Stanley, just as its top healthcare hedge fund manager was linked to an insider-trading case involving a French doctor arrested last month.

The firm has since put that fund manager, Joseph Skowron, on leave and has liquidated its healthcare funds. But the firm, which managed $7.5 billion before the scandal, has been hit with about $3 billion in redemption requests. FrontPoint said it expects to manage about $5 billion after filling those redemptions not rescinded.

"We have, as a result of clients seeking return of capital, made the extremely difficult decision to reduce staff by 28 positions—all among the non-investment team staff," FrontPoint spokesman Steve Bruce said. "These reductions will not impact our investment teams and overall client service."

The staff reduction was first reported by Dealbreaker.com on Friday.

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