(Bloomberg News) Ex-FrontPoint Partners LLC portfolio manager Chip Skowron joined those accused in a U.S. crackdown on insider trading of hedge funds when he was charged with conspiracy, securities fraud and obstruction.
Skowron, 41, of Greenwich, Connecticut, surrendered yesterday to agents at the Federal Bureau of Investigation's New York office, said James Margolin, an FBI spokesman. Information Skowron obtained from an insider about hepatitis C drug trials enabled FrontPoint to avoid more than $30 million in losses, prosecutors said.
Skowron was linked to the case brought in November by U.S. Attorney Preet Bharara in Manhattan and the U.S. Securities and Exchange Commission against Dr. Yves Benhamou, an expert in hepatitis drugs and a former adviser for Human Genome Sciences Inc., prosecutors said. He pleaded guilty April 11 to federal charges and is cooperating with the U.S., prosecutors said.
"This case is also an example of insider trading gone global," Bharara said at a news conference yesterday. "The alleged trail of cash and trade of information took the defendants from Manhattan to Milan and from Boston to Barcelona," he said. "When Dr. Skowron needed information, Dr. Benhamou was always on call, helping Skowron and his hedge fund illegally benefit to the tune of $30 million."
Benhamou acted as a paid consultant to hedge funds while also working as an adviser to HGSI and serving on its steering committee for trials of Albuferon, a hepatitis treatment, the U.S. said.
Skowron appeared briefly yesterday before U.S. Magistrate Judge Ronald Ellis, who agreed to release him on $6 million bond secured by his Connecticut home and the signatures of three financially responsible people. He declined to speak to reporters as he left the courthouse.
"Dr. Skowron intends to plead not guilty," his lawyer James Benjamin Jr. said in a statement. "We look forward to responding to the allegations more fully in court at the appropriate time."
The SEC yesterday separately accused Skowron of insider trading. Six hedge funds previously named as defendants in the case agreed to settle and pay more than $33 million in disgorgement and interest, without admitting or denying wrongdoing, the SEC said.
FrontPoint, which manages several hedge funds, closed its health-care funds last year because of the probe. It was subsequently spun off from Morgan Stanley in February.
Skowron, whose employment contract at FrontPoint was terminated in December, was previously an analyst at hedge funds Millennium Partners LLC in New York and SAC Capital Advisors LLC in Stamford, Connecticut, according to FrontPoint's marketing documents dated September.