Sunday, 24 July 2016
Last updated 1 day ago
Jun 22 2011 | 10:29am ET
Joseph Skowron, the former FrontPoint Partners portfolio manager whose involvement in an insider-trading case has brought his former firm to its knees, is in plea talks with federal prosecutors.
The talks between Skowron, who was criminally charged in April, just days after his alleged tipster, French doctor Yves Benhamou, pleaded guilty, and the U.S. Attorney’s Office in New York are continuing, a prosecutor wrote in a court filing earlier this month.
“Counsel for the defendant and I have had ongoing discussions regarding a possible disposition of this case,” Assistant U.S. Attorney Pablo Quinones wrote. On the same day, U.S. Magistrate Judge Debra Freeman granted prosecutors a one-month extension to win an indictment against Skowron, who is currently free on bail. Such extensions are usually granted in expectation of a plea agreement.
According to prosecutors, Benahmou warned Skowron that a hepatitis-C drug trial run by Human Genome Sciences, which Benhamou served as a consultant, had produced disappointing results. FrontPoint sold 3.3 million shares of Human Genome in January 2008, before the company announced those results, saving it some $30 million in losses.
FrontPoint shut down Skowron’s healthcare hedge funds shortly after Benhamou was charged last year. But the quick action failed to assuage investors, who continued to pull billions from the embattled firm, which announced last month that it would close all but four of its hedge funds, including its flagship multi-strategy fund.
Word of Skowron’s plea talks comes just days after Winifred Jiau, formerly of expert-network Primary Global Research, was convicted of selling confidential information to hedge funds. That guilty verdict was the fifth won by federal prosecutors this year, following those against Galleon Group founder Raj Rajaratnam and three others charged in the Galleon case. If Skowron pleads out, he’ll join dozens of others charged in the Galleon and Primary Global cases to do so.