SEC to Settle Lawsuit Against Ex-FrontPoint Partners Hedge Fund Manager
Ex-FrontPoint Partners LLC hedge fund manager Joseph F. “Chip” Skowron and the U.S. Securities and Exchange Commission agreed in principle to settle a lawsuit, according to court papers.
Skowron, who also charged by federal prosecutors as part of a nationwide insider-trading crackdown, last week agreed to waive his right to be indicted, the government said in a court filing. Defendants regularly take that step when agreeing to plead guilty.
Skowron surrendered in April to Federal Bureau of Investigation agents in New York to face charges of conspiracy, securities fraud and obstruction. Prosecutors accused him of obtaining information from an insider about hepatitis C drug trials enabled Greenwich, Connecticut-based FrontPoint to avoid more than $30 million in losses.
The SEC separately accused Skowron of insider trading in a lawsuit filed the same day of his surrender.
The defendant and the staff of the SEC’s Division of Enforcement have agreed in principle to the terms of a settlement that the division will recommend that the commission accept and that would “fully resolve the SEC’s claims against defendant,” lawyers for the SEC and Skowron said in a court filing dated today.
The government claims Skowron obtained nonpublic information from Yves Benhamou, an expert in hepatitis drugs and former adviser for Human Genome Sciences Inc. (HGSI) who has pleaded guilty in the case.
Skowron, the co-portfolio manager of FrontPoint’s health- care funds, was placed on leave in November after Benhamou was arrested. The funds were closed.
The civil case is Securities and Exchange Commission vs. Benhamou, 10-cv-8266, U.S. District Court, Southern District of New York (Manhattan.)
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