Sunday, 26 June 2016
Last updated 2 days ago
Dec 22 2011 | 11:06am ET
FrontPoint Partners, as recently as last year one of the largest and most well-respected hedge funds in the world, is now literally a shell of its former self.
The New York-based hedge fund and its last fund manager, Stephen Czech, have reached an agreement to spin off its last fund, the New York Post reports. Following the opening of Czech Asset Management next month, FrontPoint will have no assets under management left and just a few employees.
According to the Post, FrontPoint has been auctioning its furniture, although the hedge fund itself refused to comment.
Little more than a year ago, FrontPoint was eagerly awaiting its spin-off from Morgan Stanley, which was finalized in March. But in the interim, the once $7.5 billion hedge fund found itself embroiled in an insider-trading scandal when, in November, a French doctor was arrested and charged with passing confidential tips to FrontPoint's top healthcare hedge fund manager, Joseph Skowron.
FrontPoint quickly fired Skowron and shuttered the healthcare funds, which accounted for about half of its assets. But it wasn't enough as investors fled the firm in droves. In August, FrontPoint said it would shutter all but four hedge funds; among the shuttered funds was its flagship and two funds managed by star manager Steven Eisman, who left the firm. In September, the firm sold its Strategic Credit Fund to MatlinPatterson.
Skowron pleaded guilty to insider-trading charges and was sentenced to five years in prison.
Czech's exit was not unexpected; he has been in talks for months about a spin-off. Czech launched that $1.1 billion FrontPoint-SJC Direct Lending Fund in January with a six-year lockup, giving the embattled FrontPoint hope that it could ride out the insider-trading storm.