Ex-FrontPoint manager waives indictment

Joseph "Chip" Skowron, a former hedge fund portfolio manager charged with allegedly trading on secret information he obtained from a French doctor, has agreed to waive an indictment, according to court documents, indicating an intention to plead guilty.

Mr Skowron of FrontPoint Partners was charged with securities fraud and obstruction of justice in April for allegedly trading shares of Human Genome Sciences after learning negative news about the clinical drug trial of Albuferon, a drug used in the treatment of hepatitis C.

The doctor who served on the steering committee for the trial, Yves Benhamou, received envelopes stuffed with cash in exchange for the information, prosecutors say. He pleaded guilty in April to tipping off Mr Skowron. By trading, prosecutors allege, Mr Skowron avoided more than $30m in losses.

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The investigation, which first became known in November following the arrest of Mr Benhamou, proved too much for FrontPoint. The firm eliminated its healthcare investment team and assured investors it was not a target of the investigation. Nevertheless, investors eventually withdrew money and the fund has since wound down most of its operations. FrontPoint has not been accused of any wrongdoing.