Visium Asset Management has arrived at a preliminary sales deal with AllianceBernstein Holding LLP (AB). As part of the agreement, the asset manager will sell the Visium Global Fund, which was its remaining hedge fund. It was just recently that three of Visium’s traders were accused of securities fraud, including the mismarking of securities, and insider trading.
This week, former Visium Asset Management portfolio manager Stefan Lumiere pleaded not guilty to charges accusing him of taking part in a scam to bilk investors. The 45-year-old allegedly inflated a bond fund’s value while overstating its liquidity. The criminal charges against him are securities fraud, conspiracy, and wire fraud.
Last month, former Visium hedge fund manager Sanjay Valvani committed suicide after he was arrested for insider trading that would have occurred from ’05 to ’11. Prosecutors said that he used confidential information about drug approvals to make illegal trades. Valvani allegedly made $25M from the insider trading. Prior to his death he pleaded not guilty to conspiracy, wire fraud, and securities fraud.
Also facing criminal charges is Christopher Plaford, a former Visium portfolio manager. He pleaded guilty to criminal charges related to mismarking and his involvement in the insider trading scheme with Valvani.
Visium had previously announced that was closing its flagship Balanced Fund and three other funds. Investors were told they would get their money back.
This week, KMPG, an accounting firm, resigned as Visium Asset Management’s auditor. PKF O’Connor Davies LLP will conduct 2015 audits for the funds. Visium managing partner Jacob Gottlieb said that this change should not impact the schedule for when investors can expect their redemption payments.
Meantime, Citadel has hired 17 former Visium money managers, the majority of whom were from the Visium Global Fund.
AllianceBernstein : Citadel Hiring About 17 Portfolio Managers From Shuttered Hedge Fund Visium, 4Traders, July 20, 2016
Ex-Visium Trader Has No Idea What You’re Talking About Re: Alleged Fraud, DealBreaker, July 20, 2016
Visium’s Sanjay Valvani found dead in apparent suicide after insider trading charge, Business Insider, June 21, 2016
Visium insider-trading scheme brought down by mismarking tip, Chicago Tribune, June 20, 2016