Home ListingJune 16, 2016

Visium Managers Charged in Major Insider-Trading Case

The $7 billion hedge fund traded on private drug approval info, the SEC alleges.

Reported by Featured Author

Three current and former Visium Asset Management employees have been charged in an insider-trading case by the US Securities and Exchange Commission (SEC).

Partner and portfolio manager Sanjay Valvani allegedly reaped $32 million via drug approval tips from Gordon Johnson, a former Food and Drug Administration (FDA) official, who was also charged.

“We allege that Valvani’s formula for trading success was tapping Johnston to abuse his position of trust… and underhandedly obtain confidential information from his friends and former colleagues at the FDA,” said Andrew Ceresney, director of enforcement at the SEC.

“Valvani and his hedge funds made millions by trading on nonpublic FDA drug approval information not available to the rest of the stock market,” Ceresney continued.

Visium, founded in 2005 by CIO Jacob Gottlieb, reports $7 billion under management. It is the largest hedge fund targeted in an insider-trading case since SAC Capital, which in 2013 agreed to pay $1.8 billion and transformed into family office Point72.

Two more Visium-linked portfolios were charged in the scheme. Christopher Plaford allegedly traded on tips from Valvani and an ex-Medicaid official. Plaford and fellow portfolio manager Stefan Lumiere also “manipulated the valuation procedures” for Visium’s credit fund “by using sham broker quote to mismark securities,” the SEC’s complaint alleges.

Plaford and Visium did not return messages seeking comment by time of press.