Insider traders like Joseph F. 'Chip' Skowron III must be held responsible for the harm they cause their employers, Morgan Stanley lawyers are set to tell an appeals court in a bid to recover $10.2m.
Bloomberg reports that Skowron, 43, who is serving five years in prison, was a hedge fund manager at Morgan Stanley’s FrontPoint Partners LLC until he was charged in April 2011 with using inside information to avoid $30m in losses. Skowron is appealing a judge’s order to pay $10.2m in restitution to the New York-based bank, which closed FrontPoint after the scandal.
The U.S. Court of Appeals in Manhattan is scheduled to hear arguments Monday in Skowron’s appeal. Morgan Stanley and prosecutors support the order. Separately, the bank sued Skowron for $65m, part of what his spokesman Montieth Illingworth previously said was its effort to 'grind down what remains of Dr. Skowron’s life'.
'Morgan Stanley has a strong interest in this appeal - not only to preserve its entitlement to that restitution award but also to ensure that corporate wrongdoers such as Skowron are held responsible for the financial harm they cause their employers by reason of their misconduct', the bank’s lawyers wrote in a friend-of-the-court brief.
With U.S. prosecutors pursuing insider trading on Wall Street, banks and hedge funds will probably be watching the outcome of the case, said A. Jeff Ifrah, co-author of Federal Sentencing for Business Crimes.
'The reputation of an employer like this one can get killed by the conduct of its employee', Ifrah said in a telephone interview.
In the meantime, the news organisation reports that Temasek Holdings Pte, Singapore’s state-owned investment company, hired Morgan Stanley managing director Jonathan Popper, said two people with knowledge of the matter who asked not to be identified.
Popper oversaw mergers and acquisitions in Southeast Asia for the New York-based bank, where he has worked since 2001.Nick Footitt, a spokesman for Morgan Stanley in Hong Kong, confirmed that Popper will be leaving the firm, declining to comment further.
Finally, Bloomberg reports that Prudential Financial, the second-largest U.S. life insurer, has hired Adriana Drulla Rossi to help manage real estate investments in Brazil as the company builds operations in Latin America.
The former Morgan Stanley investment-banking and private-equity analyst will report to Fernando Herrera, regional director of investments, according to a statement last week from the real estate arm of the Newark, New Jersey-based insurer.