Former FrontPoint Partners hedge fund manager Joseph F. “Chip” Skowron pleaded guilty Monday in a U.S. insider-trading case.
Mr. Skowron pleaded guilty to one count of conspiracy before U.S. District Court Judge Denise Cote in New York. Conspiracy carries a maximum prison term of five years.
The government claimed Mr. Skowron obtained non-public information from Yves Benhamou, an expert in hepatitis drugs and a former adviser for Human Genome Sciences Inc. The tips, concerning hepatitis C drug trials, let FrontPoint avoid more than $30 million in losses, the government said. Mr. Benhamou has pleaded guilty.
FrontPoint oversaw $7 billion at the start of November before Mr. Skowron, a co-portfolio manager of its health-care funds, was linked to claims that the firm got advance notice on the drug-trial results. FrontPoint's assets slipped to $4.5 billion by January and the firm closed its health-care funds.
The SEC accused Mr. Skowron of insider trading in a lawsuit filed the day of his surrender in April. Mr. Skowron and the staff of the SEC's Division of Enforcement last week said they had agreed in principle to the terms of a settlement that the division will recommend that the commission accept and that would resolve the SEC's claims against Mr. Skowron.
FrontPoint said in a statement that Mr. Skowron "lied to and misled FrontPoint's internal compliance team, the external counsel hired to independently investigate his actions, and the federal government. FrontPoint was never accused of any wrongdoing and has fully resolved this matter with the government."