Morgan Stanley Sues FrontPoint Insider Trader

Nov 12 2012 | 2:28pm ET

Morgan Stanley has sued the former FrontPoint Partners hedge fund manager whose links to—and eventual conviction for—an insider-trading scam it says cost it tens of millions of dollars.

In a lawsuit filed last week in Manhattan federal court, the bank accused Joseph Skowron of defrauding it. Skowron, who ran FrontPoint's healthcare hedge funds, pleaded guilty last year to trading on confidential information about a drug trial, allowing his funds to avoid a $30 million loss. He was sentenced to five years in prison for the scheme, which contributed to the demise of FrontPoint last year.

Skowron was ordered in March to pay $10.2 million to Morgan Stanley, which owned FrontPoint, but the bank says that's just a drop in the bucket. It was forced to pay much of the $38.2 million in penalties imposed on Skowron a year ago following a $33 million accord with the Securities and Exchange Commission.

Morgan Stanley now wants that money from Skowron, as well as the more than $32 million it paid the hedge fund manager during his insider-trading days. "The firm paid him tens of millions of dollars in compensation while he was lying to it," Morgan Stanley's lawsuit alleges.

The bank also wants punitive and compensatory damages against Skowron.


In Depth

Q&A: Pantheon’s McCrary Says Private Equity Market ‘Robust’

Dec 17 2014 | 8:32am ET

Dennis McCrary is a partner at Pantheon, a private equity firm with $32.2 billion...

Lifestyle

Cohen Donates $1.5M To GOP Governors Association

Dec 10 2014 | 7:13am ET

The Republican Governors Association raised close to $25 million from October 1...

Guest Contributor

Q&A With Daniel Gallancy: Institutional Interest In Bitcoin Is Growing Steadily

Dec 12 2014 | 7:54am ET

Daniel Gallancy is founder and CEO of SolidX, a provider of total return swaps for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

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.