If There's A Better Way To Compensate Your Tipster For Inside Information Than Handing Him Envelopes Filled With Cash, Chip Skowron Hasn't Heard Of It

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Earlier this morning, former Frontpoint Partners manager Joseph "Chip" Skowron surrender to authorities and is expected to appear in court today on charges of securities fraud. Skowron has been accused of insider trading, in a scam that involved trading on material non-public information he obtained from a French doctor named Yves Benhamou. In one instance, saved Frontpoint from a $30 million loss based on a tip about the trial of a drug used to treat Hepatitis C, which cause the fund to make a timely sale of six million shares of Human Genome Sciences. For his helpful information, the Chipster met the the doc in various hotel rooms and paid him a bunch of money stuffed in envelopes, which strikes us as better than putting it in garbage bags or canvas sacks with a big $ sign on them and dragging them through the lobby but maybe not the best way to go about it.


Rajat Gupta Defense Team: You Think Our Client Would Pass Inside Information To A Guy Who Didn't Even Have The Decency To Invite Him To His Birthday Party?

What motivates people to share material non-public information with a person they know will use it for profit? For some, it's simply about greed. For others, it's about the thrill. For yet others, it's about pillow talk. For Rajat Gupta, the McKinsey director currently on trial for allegedly passing inside information to Raj Rajaratnam, it's about friendship, according to prosecutors who are trying to make the case that Raj and Rajat were the best of buds and that's what buds do. They they back each other up when they drunkenly hit on the girlfriend of the wrong guy at the bar, they stand up as best men at each others' weddings, they pick up the phone and say "Buy GS" when they know for a fact Warren Buffett is about to do so, too. And although attorneys representing Gupta don't deny the two were thick as thieves, they argue that while perhaps back in the day Rajat would have provided useful information to Raj, there is no way he would have done so after Big R twice violated the bonds of friendship. In the first instance, there was this: Defense attorneys have argued that Messrs. Gupta and Rajaratnam had a falling out in fall 2008 after Mr. Gupta lost his entire $10 million investment in a fund managed by Mr. Rajaratnam and therefore wouldn't have passed along inside information...The precise timing of their relationship's deterioration could be crucial in proving Mr. Gupta's guilt or raising doubts in the minds of jurors about whether he conspired to commit securities fraud...Defense attorneys have said Mr. Gupta was furious at Mr. Rajaratnam in the fall of 2008, when Mr. Gupta's $10 million investment in a fund called Voyager Capital Partners Ltd. evaporated. According to Mr. Kumar's testimony, Mr. Gupta felt Mr. Rajaratnam's negligence had allowed Voyager to collapse. And then this happened: