Chip Skowron was arrested for insider trading today.
He just surrendered to the FBI, and he’s expected in court later day, according to Reuters.
Skowron was being investigated for insider trading at FrontPoint.
It later emerged that the Dr.’s tips may have allowed FrontPoint’s healthcare-focused group to avoid up to $30 million in losses.
Dr. Yves Benhamou has pleaded guilty to the charges, according to Reuters.
Dr. Benhamou was accused of tipping off the FrontPoint portfolio manager (Skowron) when clinical drug trials for Albuferon, a potential hepatitis treatment, were foundering. (Benhamou apparently oversaw the steering committee for Human Genome Sciences (HGSI), which makes the drug.)
The SEC complaint against Benhamou alleges 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.
As a portfolio manager from FrontPoint, which was found to be one of those hedge funds, Skowron is being charged with conspiracy and securities fraud.
More on Skowron’s charges:
- Dr. Benhamou couldn’t bear to accept money from Skowron after the Albuferon death tip
- Dr. Benhamou’s tip about someone’s death in a clinical trial saved FrontPoint $30 million
- Chip Skowron told Benhamou to fabricate a story so they wouldn’t get caught