FrontPoint Partners

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FrontPoint Partners was a hedge fund that became well known for its bet against subprime mortgages during the 2008 financial crisis under Steve Eisman. It was based in Greenwich, Connecticut, with other offices in New York and London. FrontPoint was a registered investment adviser in the United States and was a wholly owned subsidiary of investment bank Morgan Stanley. An investigation into the Healthcare portfolio manager at the end of 2010 and early 2011 was the beginning of the end for Frontpoint. In August 2011, Frontpoint portfolio manager Chip Skowron pleaded guilty to insider trading and obstruction of justice. The other teams and portfolio managers (Eisman included) had nothing to do with the healthcare team and had no part in the insider trading. As a result of the investigation, investors withdrew funds and the firm shut down most of its investments in 2011. Morgan Stanley filed a civil lawsuit against Skowron in 2012, calling Skowron a “faithless servant”. In 2013, Judge Shira Scheindlin of the U.S District Court of the Southern District of New York ruled on a motion for summary judgment that Skowron must forfeit $31 million—100% of the compensation he earned from the firm between 2007 and 2010—to his employer, Morgan Stanley.