Visium Asset Management LP was an American multi-strategy

hedge fund A hedge fund is a Pooling (resource management), pooled investment fund that holds Market liquidity, liquid assets and that makes use of complex trader (finance), trading and risk management techniques to aim to improve investment performance and ...

and private equity firm. It began as a healthcare-focused fund, founded in 2005 by Jacob Gottlieb. In 2016, three of the company's traders were indicted by United States federal authorities for

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''. At the company's most successful point in 2016, they had at least $8 billion in

assets under management In finance, assets under management (AUM), sometimes called fund under management, refers to the total market value of all financial assets that a financial institution—such as a mutual fund, venture capital firm, or depository institutio ...

. Visium Asset Management started as a

family business A family business is a commercial organization in which decision-making is influenced by multiple generations of a family, related by Consanguinity , blood, marriage or adoption, who has both the ability to influence the vision of the business a ...

. Until 2010, Gottlieb's father had a desk within the firm's New York office and, on occasion, informally advised the company on accounting matters. Jacob Gottlieb's brother Mark worked at Visium in various roles, in a move regarded by ''Bloomberg News'' as a "potential conflict of interest". Additionally, ''Bloomberg'' reported that portfolio manager Stefan Lumiere "was hired in 2007, two years after his sister Alexandra became engaged to acobGottlieb." Despite his public commitment to "the highest ethical conduct or Visium employees, Gottlieb directly owned 25,703 pre-IPO shares of

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despite the company having 5.2% stake as well. This caused at least one investor complaint, and the company received accusations of double standards from several employees.

Winding down and closure

Investigation for fraud

A former trader with the firm, Jason Thorell, told the

U.S. Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

in 2013, according to ''

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'', that "Visium employees routinely sought sham quotes from brokers to justify inflated values for debt securities, and deviated from prices set by third-parties on a magnitude beyond what was usual." Thorell would cooperate with federal investigators who asked him to secretly record individuals at the firm including Gottlieb's brother-in-law Lumiere. He cooperated with federal investigators and secretly recorded over 200 hours of conversations with individuals at the firm over two years. In March 2016, Visium notified shareholders that Visium was being investigated by the

United States Department of Justice The United States Department of Justice (DOJ), also known as the Justice Department, is a United States federal executive departments, federal executive department of the U.S. government that oversees the domestic enforcement of Law of the Unite ...

and the

regarding the company's actions in regard to their Credit Opportunities Fund which had been shut down in 2013. The investigation led to large customer withdrawals. Later in June, three traders at the firm were charged with

securities fraud Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information. Sanjay Valvani and Chris Plaford were indicted for insider trading while Plaford and Stefan Lumiere were accused of inflating the value of the Credit Opportunities Fund. The Securities and Exchange Commission barred former portfolio manager, Christopher Plaford, from the securities industry after charges that he inflated asset prices under a fraudulent scheme at Visium Asset Management. In 2016, Plaford pleaded guilty to securities fraud and was permanently banned from the securities industry. Separately, Plaford's cooperation with the government led to a jury conviction of a research consultant, David Blaszczak, the founder of Precipio Health Strategies, for violating insider-trading rules by obtaining and relaying nonpublic information from the Centers for Medicare and Medicaid Services about coming changes in health-care policy to Deerfield Management. The jury also convicted the government employee who leaked the tips as well as a pair of Deerfield Management employees who made trades based on the information. Later, Steven Ku, Visium's former Chief Financial Officer, agreed to be barred from the securities industry for one year and pay $100,000 to settle the agency's allegations that he failed to supervise portfolio managers Christopher Plaford and Stefan Lumiere.

''United States v. Valvani''; suicide

In 2016, portfolio manager Sanjay Valvani and two others were charged with

insider trading Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider informati ...

by federal prosecutor

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, the

United States Attorney for the Southern District of New York The United States attorney for the Southern District of New York is the United States Attorney, chief federal law enforcement officer in eight contiguous New York counties: the counties (coextensive boroughs of New York City) of New York County, ...

. While managing the firm's flagship healthcare fund, according to federal authorities, "Valvani specifically made about $25 million by trading on non-public information about pending drug approvals from the

Food and Drug Administration The United States Food and Drug Administration (FDA or US FDA) is a List of United States federal agencies, federal agency of the United States Department of Health and Human Services, Department of Health and Human Services. The FDA is respo ...

". Valvani had worked for the company since its inception in 2005, and reportedly managed as much as $2 billion in funds. Valvani turned himself in to authorities on June 15, 2016, and was arrested. He pled not guilty to five counts. He was freed on

bail Bail is a set of pre-trial restrictions that are imposed on a suspect to ensure that they will not hamper the judicial process. Court bail may be offered to secure the conditional release of a defendant with the promise to appear in court when ...

in the amount of $5 million, secured by his home. If convicted, Valvani would have faced up to 85 years in prison. Valvani's two alleged co-conspirators pled guilty, however. The two admitted their participation with Valvani in the illegal scheme, and agreed to cooperate in the case against Valvani. On June 20, 2016, five days after he was indicted, Valvani was found dead in an apparent suicide. Due to his death, the government's court case against him had to be dropped. In 2019, Visium filed a complaint against Sanjay Valvani's widow and estate seeking over $100 million be returned, due to Valvani's alleged illegal conduct and breach of

fiduciary duty A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (legal person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, fo ...

. In 2020, the suit was dismissed by the

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citing the expiration of the statute of limitations.

''United States v. Lumiere''

Two years after his sister's 2005 marriage to Gottlieb, Stefan Lumiere joined Visium, ultimately working under Chris Plaford in the firm's Credit Opportunities Fund which held assets consisting of

distressed debt In corporate finance, distressed securities are securities over companies or government entities that are experiencing financial or operational distress, default, or are under bankruptcy. As far as debt securities, this is called distressed debt. ...

. He was accused of fraudulently overvaluing the assets of the fund, and was convicted of securities fraud after his case went to trial. Lumiere was sentenced to 18 months in prison followed by three years' supervised release and a $1 million fine.

Liquidation

In the wake of the controversy, Jacob Gottlieb wound down the company he originally founded. Following negotiations with the Securities and Exchange Commission in 2018, the company forfeited $10.2 million to regulators in exchange for being able to shut down. The firm had begun

liquidation Liquidation is the process in accounting by which a Company (law), company is brought to an end. The assets and property of the business are redistributed. When a firm has been liquidated, it is sometimes referred to as :wikt:wind up#Noun, w ...

two years earlier, selling the Visium Global Fund to

AllianceBernstein AllianceBernstein Holding L.P. (AB) is a global asset management firm providing investment management and research services worldwide to institutional, high-net-worth and Investor, retail investors. AllianceBernstein's headquarters are located ...

. , the firm was operating under the name VA Management LP.

Winding down and closure

Investigation for fraud

''United States v. Valvani''; suicide

''United States v. Lumiere''

Liquidation

Notes

Sources

Further reading