An $8 billion hedge fund suddenly imploded - here's how it played out
Screenshot via BloombergTVVisium's founder, Jake Gottlieb.Visium Asset Management, a one-time rising hedge fund, is shutting down after its former employees were charged with insider trading and fraud.
It's a quick turnaround since the New York hedge fund managed $7.8 billion at the start of the year.
The fund had been amassing assets for years, as per Hedge Fund Intelligence data.
Much of that money came from public funds, such as university endowments and pensions that invest on behalf of teachers, firefighters and police.
That's even as some on Wall Street were backing away from Visium.
Morgan Stanley disinvited Visium's founder from a marquee "Breakers" conference, and Steve Cohen, the billionaire hedge funder put a ban on hiring people who had worked at Visium before Visium told its investors it was under investigation.
Here's how things played out:
- 2005 - Visium portfolio managers Sanjay Valvani and Chris Plaford allegedly start insider trading around healthcare stocks. This allegedly lasts through January 2011.
- June 2011 - September 2013 - Visium staffers Stefan Lumiere and Plaford allegedly mismark the value of securities in a fixed-income fund in order to turn a profit.
- May 2012 - A public pension, the New Jersey State Investment Council, commits $150 million to Visium's healthcare fund.
- January 2014 - Visium's founder Jake Gottlieb breaks the hedge fund's rule against personal account trading, rankling investors.
- Mid-2014 - A New York investment consultant directs its clients - pensions, endowments and other investors - not to invest in Visium after traders in the healthcare space raise concerns about Visium's performance.
- January 2015 - Morgan Stanley disinvites Jake Gottlieb from its "Breakers" conference, its marquee Florida event which connects hedge funds with wealth families and other potential investors. The bank keeps Visium as a client on its prime brokerage platform, a profitable business that investment banks offer to hedge funds to help process trades.
- Early 2015 - Investment consultant Aksia, which prided itself on calling out the Madoff Ponzi scheme years before it blew up, advises a pension and endowment to invest $32 million with Visium.
- July 2015 - The University of Michigan's endowment commits $50 million to Visium.
- Fall 2015- Another public pension, the State of Michigan Retirement Systems, commits $100 million to Visium.Reuters/ Steve Marcus
- Pre - March 2016 - Steve Cohen bans hiring staffers from Visium. This ban was in place before the investigation became public. The exact start date is unclear.
- March 2016 - Visium tells investors it is under federal investigation. It is unclear when authorities began their inquiry.
- April 2016 - Visium places Sanjay Valvani, one of the Department of Justice's insider-trading targets, on leave.
- June 15, 2016 - Feds charge three Visium staffers with fraud, including Valvani, who turns himself in and pleads not guilty. The Michigan pension says it won't review its recent $100 million investment in Visium until September.
- June 17, 2016 - Visium announces it will shut down. Its healthcare fund reaches a new low for the year, declining more than 10%.
- June 20, 2016 - Valvani commits suicide. His lawyers maintain his innocence.