Chip Skowron, the ex-FrontPoint Partners hedge fund manager charged as part of a nationwide insider trading crackdown, is in talks with federal prosecutors that may involve plea negotiations, according to court filings.
Mr. Skowron was charged in April by the office of U.S. Attorney Preet Bharara in Manhattan with conspiracy, securities fraud and obstruction. He was also sued by the SEC.
Prosecutors claimed he obtained non-public information from Yves Benhamou, an expert in hepatitis drugs and a former adviser for Human Genome Sciences. The tips concerned hepatitis C drug trials and enabled FrontPoint to avoid more than $30 million in losses, the government said. Mr. Benhamou has since pleaded guilty.
“Counsel for the defendant and I have had ongoing discussions regarding a possible disposition of this case,” Assistant Manhattan U.S. Attorney Pablo Quinones wrote in court papers filed June 13 in Mr. Skowron’s case. “We plan to continue our discussions.”
More than a dozen people have been charged by Mr. Bharara’s office since November in cases tied to so-called expert networking firms. The consulting firms match hedge funds with industry experts who provide market advice. At least nine people have pleaded guilty or been convicted by a jury.
Winifred Jiau, a former consultant with expert networking firm Primary Global Research, was convicted of securities fraud and conspiracy June 20 in Manhattan federal court.
The broader U.S. probe of insider trading has implicated hedge funds, banks and insiders at technology companies. Mr. Bharara said that, since he took office, his prosecutors have charged 49 people with insider trading and 44 have been convicted.
U.S. Magistrate Judge Debra Freeman in New York signed an order June 13 granting prosecutors a one-month extension to obtain an indictment against Mr. Skowron. Since May, the government has twice obtained similar extensions in the case, according to court records. James Benjamin Jr., Mr. Skowron’s lawyer, didn’t return a call or e-mail seeking comment.
FrontPoint oversaw $7 billion at the start of November before Mr. Skowron, a co-portfolio manager of its health-care funds, was tied to claims by prosecutors that the firm got advance notice on drug-trial results.
FrontPoint’s assets slipped to $4.5 billion by January and the firm closed its health-care funds. Mr. Benhamou’s lawyer, David Zornow, and Steve Bruce, a spokesman for FrontPoint, declined to comment. Carly Sullivan, a spokeswoman for Mr. Bharara, declined to comment.