The on-going insider trading investigations have not been kind to FrontPoint Partners. Recall that the once high-flying hedge fund firm was dealt a debilitating blow when one of its health care fund portfolio managers was charged with insider trading. The case has not been resolved, and the fund manager apparently intends to fight the charges.

But limited partners got nervous anyway and started redeeming their investments somewhat indiscriminately. This left FrontPoint little choice but to shut down most of its funds. Both of Steve Eisman's funds--the Financial Horizons and Financial Services funds--were swept up in that decision. Undaunted, Eisman is said to be making plans to open his own shop.

To be sure, both funds were under pressure even before the pyrotechnics of the insider trading allegation kicked up. So it's unclear how potential investors will view the new opportunity to invest with Eisman. Most likely, he'll offer some nice incentives. Eisman is known for his massive short bet on housing market a few years ago, which paid off fabulously by catching the eye of Michael Lewis, who wrote about him in The Big Short.

Eisman is certainly no stranger to controversy. Most recently, his short bets against for-profit education companies was heavily criticized by the influential lobbyist Grover Norquist, who suggested that Eisman's very profitable short selling of these firms may have benefited from advance knowledge about a proposed regulation that would effectively penalize for-profit companies. He's asked for an SEC investigation, but no charges have been filed.

For more:
- here's the article from FINalternatives

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