Skowron To Plead Guilty In FrontPoint Insider-Trading Case

Aug 3 2011 | 11:01am ET

Federal prosecutors appear poised to win yet another guilty plea in a hedge fund insider-trading case.

Joseph Skowron, the former FrontPoint Partners healthcare manager whose implication in an insider-trading scam helped all-but bring down the once-$7.5 billion hedge fund, will waive his right to be indicted, according to a court filing. Such a move is usually followed by a guilty plea.

Skowron, who was arrested in April, six months after FrontPoint's name emerged as a beneficiary of tips from French doctor Yves Benhamou, has been in plea talks with prosecutors since at least June, when prosecutors sought an extension of their deadline to seek an indictment against Skowron. At the time, Assistant U.S. Attorney Pablo Quinones wrote, "counsel for the defendant and I have had ongoing discussions regarding a possible disposition of the case."

The filing yesterday was signed both by prosecutors and by Skowron's lawyer, James Benjamin.

According to prosecutors, Benahmou, who pleaded guilty in April, warned Skowron that a hepatitis-C drug trial run by Human Genome Sciences, on 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 earlier this year that it would close all but four of its hedge funds, including its flagship multi-strategy fund.

Skowron, who is free on $6 million bail, also faces a civil lawsuit filed by the Securities and Exchange Commission.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this race. The Citadel...

Guest Contributor

Top 5 Predicted Outcomes Of CalPERS' Hedge Fund Divestment

Sep 22 2014 | 8:35am ET

CalPERS’ announcement to divest of hedge funds has created a significant buzz...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

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.