|FrontPoint Partners, the hedge fund rocked by an insider trading scandal in November 2010, has announced that it will be winding down the majority of its funds due to investor redemption requests. According to an article on NY Times Dealbook, the firm was at the center of a major insider trading investigation due to the actions of portfolio manager Joseph F. Skowron, who ran the health care portfolio at FrontPoint. Mr. Skowron allegedly paid cash to a French doctor for insider information on clinical drug trials. |
FrontPoint Partners made efforts to reassure investors, including terminating the entire healthcare team. However, investors still withdrew over $3.5 billion, about half of the hedge fund’s assets under management at that time. Steve Eisman, a star portfolio manager at FrontPoint known for profiting handsomely from calls made during the financial crisis, also announced he was considering leaving the firm due to backlash from the firm’s scandal in his own funds.
FrontPoint recently raised over $1 billion for a midsize lending fund, which will remain open. The hedge fund has stated that it will not be going out of business, and co-Chief Executive Officers Dan Waters and Mike Kelly recently announced they had bought back majority ownership from Morgan Stanley.