Insider trading charge No. 47 (and counting)


Joseph Skowron, an ex portfolio manager at FronPoint Partners, surrendered to the FBI on Wednesday after being charged with insider trading. Allegedly, Skowron sold his stakes in a drug company after receiving inside tips from Yves Benhamou, a doctor sourced through an unidentified expert network.


According to Bloomberg news,  Skowron included, there have been 47 people charged with insider trading as part of intensified SEC investigations in the last 18 months. And there is no sign that the investigations will recede anytime soon.


Given the current regulatory environment, a prudent measure for Investors and primary research providers would be to intensify their radars for material non-public information that could be linked to insider trading cases. No cautionary measure seems exaggerated when it comes to protect investors and research providers given the 47 (and counting) cases of insider trading in the last year and a half.


It has been reported that FrontPoint is settling the charges with the SEC with $33 million in disgorgement and interest. A fraction of that amount, had it been properly channeled into strengthening the compliance framework of the fund, would have allowed FrontPoint to establish measures to protect itself.


Similarly, expert networks or other primary research firms can avoid following Primary Global’s path by allocating resources to enforce a robust compliance framework.



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