FrontPoint completes split from Morgan Stanley

* Split was announced in October

* Morgan Stanley to retain minority stake

BOSTON, March 1 (Reuters) - FrontPoint Partners, the $4.5 billion hedge fund ensnared in the government's insider trading probe, is back on its own after more than four years of living with investment bank Morgan Stanley (MS.N).

FrontPoint's co-chief executive officers told investors that the long-planned split from its corporate parent was now complete.

"Everyone at FrontPoint is focused on generating investment performance, and we are delighted to be moving forward as an independent entity with Morgan Stanley as our partner," Dan Waters and Mike Kelly wrote in a letter obtained by Reuters.

The two companies announced plans to split up in October, roughly four years after Morgan Stanley bought the Greenwich, Connecticut-based fund for $400 million in 2006 and only a few days before the fund became embroiled in the government's probe into how fund managers use industry experts to boost returns.

Morgan Stanley still holds a minority stake.

The move allows FrontPoint portfolio managers, including Steve Eisman, arguably the firm's biggest star who cashed in on anticipating the housing market collapse long before anyone else, to operate more independently.

Late last year, FrontPoint's health care funds were forced to close down after a French physician was arrested and charged in early November with having illegally passed inside information to Joseph Skowron, a FrontPoint manager.

Neither Skowron nor FrontPoint have been charged with any wrongdoing.

At its peak before the financial crisis in 2008, FrontPoint managed $10 billion. (Reporting by Svea Herbst-Bayliss; Editing by Derek Caney)