Jacob Gottlieb’s Visium Asset Management, the once high-flying hedge fund firm that at its peak managed $8bn, is shutting down four of its remaining hedge funds after one of its star managers was arrested and accused of insider trading.
Bloomberg News reports that the firm will liquidate the main Balanced Fund, as well as its Institutional Partners Fund, Equity Alpha Fund, and Equity Alpha UCITS Fund, according to a letter to investors seen by Bloomberg News. Visium earlier on Friday struck an agreement to sell its multi-sector hedge fund to AllianceBernstein LP.
The decision follows months of turmoil at Visium that began in March when Gottlieb told investors his firm was under federal investigation for some trades. On June 15, U.S. prosecutors said they arrested Sanjay Valvani, a Visium partner and money manager, who the government claims reaped more than $32m from trades in drug companies using secret tips. Already before the news, clients had asked to pull at least $2bn from the firm in the second quarter, people familiar with the matter said.
“These were very difficult decisions for me and the Visium team but given the uncertainty relative to the final outcome of the recent regulatory developments, the negative impact of the resulting publicity, and the substantial investor withdrawals, it became clear that maintaining the status quo was increasingly untenable for the firm,” Gottlieb said in the letter.
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