Saturday, 23 July 2016
Last updated 11 hours ago
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.