FrontPoint

FrontPoint Partners embroiled in insider trading case

November 3, 2010: 11:03 AM ET

The latest insider trading investigation involves an employee at FrontPoint Partners, a hedge fund currently in the process of being spun off by Morgan Stanley (MS).

Civil and criminal cases brought by the SEC and the U.S. attorney's office in New York allege that a French doctor shared confidential information with a hedge fund manager about clinical drug trials. The Wall Street Journal has confirmed that FrontPoint -- which is not named in the complaint -- is the hedge fund at the center of the case. According to a statement from FrontPoint, its portfolio manager Chip Skowron, who oversees some of the firm's health-care investments, has been placed on leave.

Dr. Yves Benhamou, the French doctor who has been charged, allegedly told a fund manager about clinical trials that had negative implications for the drug Albuferon, which was being developed by Human Genome Sciences, Inc. (HGSI).  "The portfolio manager knew or should have known that Benhamou… owed a duty of confidentiality to HGSI, but, nonetheless, he immediately took action to sell the hedge funds' holdings of HGSI common stock," says the complaint. More

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