The amount is the compensation that Joseph "Chip" Skowron III received during the three-and-a-half year period he was engaged in insider trading as a portfolio manager at bank-owned FrontPoint Partners, said the ruling from the U.S. District Court, Southern District of New York.
"Insider trading is the ultimate abuse of a portfolio manager's position and privileges," Judge Shira Scheindlin said in her ruling. in legal terms, Skowron was found to be a "faithless" employee.
At Skowron's sentencing, he was ordered to pay Morgan Stanley 20% of the $31.1 million. The bank then brought a civil suit seeking all of it.
In August 2011, Skowron pleaded guilty to conspiracy to commit insider trading "from at least April 2007 through November 2010," the Thursday ruling from Scheindlin reads. He used non-public information to gain investment advantages and also lied to the Securities and Exchange Commission about it, Scheindlin's ruling said. Skowron is now serving a five-year sentence.
Skowron's regular yearly salary -- $1.5 million -- was small compared to bonuses his contract with Morgan granted him. All told, millions more rolled in during that period, reaching that total of $31.1 million.
"In addition to exposing Morgan Stanley to government investigations to and direct financial losses, Skowron's behavior damaged the firm's reputation, a valuable corporate asset," Scheindlin said.
Morgan Stanley cheered the ruling. "We are extremely pleased that the court has granted our request to recover compensation paid to Chip Skowron while he was engaged in insider trading and obstruction of justice," spokesman Matt Burkhard said. "We expect all of our employees to act with honesty and integrity and follow both the letter and the spirit of the law and our own Code of Conduct."
Contributing: Kevin McCoy
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