Hedge fund manager Chip Skowron III of FrontPoint Partners is the latest of many to be charged with insider trading. Prosecutors charge that Yves Benhamou, a Paris based doctor, leaked inside information on a clinical drug trial. Skowron has been charged with conspiracy to commit securities fraud, securities fraud and obstruction of justice. Apparently, he urged Benhamou to lie to investigators about information he provided. Benhamou pleaded guilty this week and is cooperating.
The U.S. alleged Benhamou shared insider information with a co-conspirator at a hedge fund, allowing that fund to avoid about $30 million in losses. The U.S. today identified Skowron and FrontPoint as the hedge fund that Benhamou tipped.
Benhamou, of France, was charged Nov. 2 by Bharara’s office with insider-trading. The U.S. said Benhamou, whose expertise is hepatitis and liver diseases, held dual roles. He acted as a paid consultant to at least six hedge funds while working as an adviser to Human Genome, a developer of gene-based drugs, and served on its steering committee for Albuferon trials, the U.S. Securities and Exchange Commission alleged in a parallel lawsuit also filed in federal court in New York.
FrontPoint held 3.3 million shares of Human Genome at the end of the fourth quarter of 2007, valued at $34.3 million, according to data compiled by Bloomberg News. It held none at the end of the following quarter. Human Genome fell 44 percent on Jan. 23, 2008, after saying it will change the dosing of its experimental hepatitis-C drug Albuferon in patient tests. Before joining FrontPoint, Skowron was 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. Skowron graduated with a Ph.D. in cellular and molecular biology from Yale University, according to the documents.