$8BN Hedge Fund Failure

D

DallasCowboysFan

I bet Karen the Supertrader is probably thinking...well, I only lost 211MN....that's not nearly as bad as 8BN. She's probably thinking this might take some of the attention off her......lol

What's interesting though, is how widespread the corruption seems to be. It seems that there were numerous infractions and insider trading from 2005-2011.

It's amazing they didn't get caught earlier.

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Visium Asset Management, a multibillion-dollar hedge fund, has imploded in the biggest scandal to hit the industry in years.

The fund told investors of its plan to close in a letter Friday. It's the most high-profile shutdown since authorities forced Steve Cohen's controversial SAC Capital to close in 2013.

A slew of factors — from a brewing insider-trading scandal to a contentious investment by Visium's founder that rankled investors and staffers alike — led to Visium's demise.


Just days before Visium announced the shut down, one of its top portfolio managers — Sanjay Valvani — was charged with wire and securities fraud. He is accused of using insider information from a Food and Drug Administration official to place trades on drug companies ahead of key FDA decisions from about 2005 through 2011.

Two other former Visium portfolio managers, Christopher Plaford and Stefan Lumiere, were accused of purposefully miscalculating the price of securities so that they could charge investors inflated fees and mislead them about the fund's liquidity.

The closure of the firm represents a remarkable turnaround: It managed about $7.8 billion firmwide at the start of the year, a 20% increase from the year before, according to Hedge Fund Intelligence.



Then there are the "substantial investor withdrawals" that Gottlieb referred to in his letter Friday. It isn't clear exactly how much investors asked to pull from the firm, but two people familiar with the matter said the number was in excess of $3 billion.


The speed with which Visium has been forced to shutter is striking. As recently as last year, an industry publication highlighted the firm for its strong performance. And in 2014, Gottlieb was one of the headliners at a prominent New York hedge fund conference.

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more...


http://finance.yahoo.com/news/wall-street-rocked-8-billion-150229008.html
 
$7.8 billion AUM implies Visium's investors were mostly institutional which begs the question how can these institutional investors be so gullible or did they not do the necessary due diligence.
 
conduit said:
Nowhere does it suggest that the fund lost nearly as much as you suggested. Please read more carefully.
More...

I never said he lost 8BN, but he is under investigation for a number of different infractions that go back to 2005. It's amazing that someone could get away with something for 11 years in an environment like Finance where everything is scrutinized.

It also said the founder graduated medical school and immediately went into Finance.
That is not the average career path for graduating doctors.

Anyhow, it said that withdrawals had reached 3BN. I wonder how the investors learned that something wrong was going on before it reached the news ?



But it still failed.
 
If you remain long enough in this industry you won't be too surprised anymore. Every now and then another madoff drops dead.

DallasCowboysFan said:
I never said he lost 8BN, but he is under investigation for a number of different infractions that go back to 2005. It's amazing that someone could get away with something for 11 years in an environment like Finance where everything is scrutinized.

It also said the founder graduated medical school and immediately went into Finance.
That is not the average career path for graduating doctors.

Anyhow, it said that withdrawals had reached 3BN. I wonder how the investors learned that something wrong was going on before it reached the news ?



But it still failed.
More...
 
I guess his guilty conscience got to him. I know he did wrong, but he still could have overcome his problems.


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The hedge fund exec charged with insider trading last week has been found dead.


Sanjay Valvani, a portfolio manager at Visium Asset Management who was charged with insider trading last week, was found dead Monday night.

A New York Police Department representative said Valvani was found by his wife and left a suicide note.

Valvani, 44, turned himself in to authorities last week. He was charged with netting about $25 million for an unnamed investment firm using inside information on the pending approval of a generic drug. Valvani had pleaded not guilty.

Visium had placed Valvani on leave earlier this year after it announced that it was under investigation. The hedge fund said on Friday that it would shut down its operations.

Valvani faced numerous charges, according to the complaint:

  • Valvani was accused of committing securities and wire fraud with a former senior Food and Drug Administration official, Gordon Johnston, from about 2005 through 2011.
  • Valvani "unlawfully obtained highly confidential and material nonpublic information from the FDA about the agency's approval of pending generic drug applications," according to the US attorney's statement.
  • Valvani was also charged with passing material nonpublic info to Chris Plaford, a former Visium portfolio manager, who allegedly traded on that info.
  • Johnston and Plaford have pleaded guilty and admitted their participation in the scheme.
  • The complaint said Valvani instructed Johnston, the former FDA official, about the status and approval of a generic drug, and Johnston passed along that info back to Valvani. Valvani was accused of using that info to bet on two pharma companies that were likely to be affected by the inside tip, allegedly netting about $25 million in trading profits. Valvani was also accused of tipping off Plaford on this info.
A representaive for the Department of Justice declined to comment on whether Valvani's death would affect the case.

http://finance.yahoo.com/news/report-hedge-fund-exec-charged-132757235.html
 
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