Visium Trader Recorded 125+ Conversations, Court Docs Reveal

Aug 30 2016 | 11:31pm ET

A court filing in Manhattan federal court has revealed that a junior trader at Visium Asset Management secretly recorded more than 125 conversations, or 200 hours of material, with former colleagues at the $8 billion hedge fund firm.

The informant, who has been identified by various media outlets in prior reporting but who is identified in the filings only as CC-1, has reportedly been granted immunity in return for cooperation, according to a Bloomberg article. In fact, the informant may receive payment under federal whistleblower programs that have recently been strengthened at the SEC. 

Visium has been at the center of a long-running saga that started as an investigation into trading and valuation of credit securities held in fund that closed in 2014 and morphed into a criminal investigation into whether individuals at the firm were trading on insider information supplied by a former official with the U.S. FDA. Visium’s founder, Dr. Jacob Gottlieb, has a background in medicine and originally concentrated Visium on healthcare-related investing before branching out.

The insider investigation broke out into the open in mid-June, when the SEC charged several individuals with insider trading infractions. Two have since pled guilty, while Sanjay Valvani, the most senior of the group, committed suicide one week later. 

Subsequently, Visium Asset Management shuttered its flagship fund and tried to sell its smaller Visium Global fund to AllianceBernstein, but that deal was scuttled shortly thereafter when Ken Griffin’s Citadel lifted 17 portfolio managers from Visium to form the nucleus of a new equity group named Aptigon. The firm has been unwinding since. 

The case is U.S. V Lumiere, 1:16-cr-00483, U.S. District Court, Southern District of New York (Manhattan).

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