A former hedge fund manager, a medical researcher and 6 hedge funds settled SEC charges they had profited by sharing insider information starting in early 2008.  Federal Judge Deborah Batts entered final judgments against Dr. Joseph F. Skowron III and Dr. Yves M. Benhamou in the SEC’s insider trading case (SEC v. Joseph F. “Chip” Skowron III, et al., Players. Joseph F. “Chip” Skowron III, a former hedge fund manager for 6 health care-related hedge funds affiliated with FrontPoint Partners LLC.  Dr. Skowron was a Yale-educated doctor, who gave up a budding career as an orthopedic surgeon for Wall Street riches.  He became a star hedge fund manager, using his medical knowledge to earn millions  trading health care stocks.  He had a truly blessed life - then threw it away. Dr. Yves M. Benhamou, a French doctor and medical researcher who served on the Steering Committee overseeing Human Genome Sciences Inc.'s (HGSI) clinical trial for Albuferon, a potential drug to treat Hepatitis C. Both men had pleaded guilty this past summer. SEC Allegations. Benhamou, knowing that the clinical trials for the drug ended negatively, he allegedly passed the information to Skowron who used it to sell the entire position in HGSI stock - some 6 million shares held by 6 funds - prior to the company's public announcement on 1/23/08.  The sale, which preceded the expected drop-off in share price saved the funds $30 million in losses. The SEC alleged that, at various points in the relationship, including after the illegal HGSI trades were completed, Skowron gave Benhamou envelopes of cash both in appreciation of his work and to induce Benhamou to lie about their communications.   Civil and Criminal Sanctions. Skowron agreed to pay $29 million in disgorgement (jointly and severally with 6 hedge fund relief defendants), $1.4mn in disgorgement (his individual obligation), prejudgment interest of $5.1mn, and $2.7mn in penalties - a total of $38.2 million.   Skowron was sentenced to a 5-year prison sentence on the criminal charges. Benhamou was ordered to pay $60,000 in disgorgement and prejudgment interest.  Benhamou will be sentenced on criminal charges next month. The six hedge funds, named solely as relief defendants, were ordered to disgorge $29,017,156, plus prejudgment interest of $4,003,669. Both Skowron and Benhamou pled guilty in parallel criminal cases before the United States District Court for the Southern District of New York, titled United States v. Joseph F. Skowron III, 11-CR-00699-DLC (S.D.N.Y.) and United States v. Yves M. Benhamou, 11-CR-336-GBD (S.D.N.Y.). For further information, go to:  [SEC Litigation Release 22158, 11/17/11]   and [Dealbook, 11/18/11]