Business

Hedge fund FrontPoint hands out 28 pink slips

FrontPoint, the much maligned Morgan Stanley hedge fund firm, has laid off 28 people following a flood of redemptions.

The former high-flying firm has been hit by some $3 billion in withdrawal requests since one of its star portfolio managers, Chip Skowron, was implicated in an insider-trading scandal.

Skowron hasn’t been charged with any wrongdoing, but his $1.5 billion healthcare fund was shuttered after it emerged that he received a tip about a clinical trial from a French doctor, Yves Benhamou, who has been charged by federal prosecutors.

Skowron also allegedly directed a FrontPoint employee to trade on the information, according to prosecutors.

“We have, as a result of clients seeking a return of capital, made the extremely difficult decision to reduce staff by 28 positions — all among the non-investment team staff,” FrontPoint said in a statement. “These reductions will not impact our investment teams and overall client service.

“FrontPoint is committed to maintaining our world-class investment services to our clients while making certain the firm is operationally and financially stable. We are grateful to those employees for their dedicated service to FrontPoint and our clients.”

Pension & Investment Online reported that FrontPoint, which recently managed $7.5 billion, received a whopping $3 billion of redemption requests from clients, according to a Nov. 26 letter to clients.