Chip Skowron, a former healthcare portfolio manager at FrontPoint Partners who was charged with securities fraud and conspiracy, is still in discussions with prosecutors, which may be about a possible plea deal, according to the Bloomberg wire service.
“Counsel for the defendant and I have had ongoing
discussions regarding a possible disposition of this case,”
an Assistant Manhattan U.S. Attorney wrote in court
papers. “We plan to continue
These discussions could be about a few things. Skowron may be in plea discussions, for example.
Skowron was suspended from FrontPoint last year after allegations he had traded illegally based on tips from a man called Dr. Yves Benhamou, who worked for a drug company, Human Genome Sciences (HGSI).
Benhamou was accused of tipping off Skowron, when clinical drug trials for Albuferon, a potential hepatitis treatment, were foundering. Benhamou oversaw the steering committee for HGSI, which makes the drug.
Benhamou has already pleaded guilty.
The original SEC complaint alleged that six healthcare focused hedge funds dumped 6 million shares of HGSI common stock on several key dates between November 2007 and January 23, 2008, just before before negative trial results were made public.
One of the hedge funds was FrontPoint.
In December, due to about $3 billion in redemptions, FrontPoint fired 28 workers, including Skowron, whose $1.5 billion healthcare fund had already been shuttered in the wake of the insider trading allegations. The redemptions are said to be a contributing factor in Steve Eisman’s decision to leave the hedge fund.
FrontPoint’s healthcare-focused group was established in 2003 when, Skowron, along with Jason Bonadio and Ajay Bhalla, joined from SAC Capital.
More details on the negotiations to come.
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