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Visium Asset Management facing US regulatory probe

March 8
5:12 AM 2016

The US Securities Exchange Commission (SEC) and Justice Department are probing into Visium Asset Management hedge fund over trading and valuation issues. US authorities are scrutinizing hedge fund trading including Visium's exposure to healthcare sector. 

Dr Jacob Gottlieb, Managing Partner of Visium Asset Management, told his employees about the investigation by the Justice Department and US SEC. The New York-based hedge fund has $8 billion assets under management and is one of the largest hedge funds with exposure to healthcare industry. However, the spokesperson for Visium Asset Management didn't reveal any information about the ongoing probe by US authorities.

The Wall Street Journal (WSJ) reports that the hedge fund used borrowed funds 2.5 times more than its assets. It's estimated that Visium Asset Management has over $20 billions of investments. About of half of these investments are in healthcare industry and the rest are in other segments. 

Established in 2005, Visium Asset Management has offices in San Francisco and London also and the headcount is over 170. A medical graduate from New York University, Dr Gottlieb, runs the hedge fund with a focus on healthcare stocks.

CNBC further adds that Visium hedge fund invests money for pension funds including New Jersey State Investment Council. Visium Asset Management reported gains in 2015, while hedge fund average returns were negative. Visium Asset Management has multi-strategy fund Visium Global, which rose 10.2 percent in 2015. However, Visium Global eased two percent during January and February 2016. Visium Balance, healthcare fund from Visium Asset Management,  rose 5.6 percent in 2015, but now down three percent this year so far.

Dr Gottlieb said in a letter to employees that Visium was arranging information to the US officials. Addressed to employees, Visium's letter said "Additionally, they have requested information regarding the trading of certain securities, including the use of a consultant who stopped providing services to the firm in 2011. We are providing the requested information to the Government."

US officials are probing into how Visium Asset Management valued certain securities in a credit fund, which was closed down in 2013. US officials also asked Visium to furnish details about trading of certain securities including a consultant, who stopped services to it in 2011, as reported by Pension & Investments.

Previously, Dr Gottlieb worked at Balyasny Asset Management. This company later spun off Visium Asset Management into a new firm. Dr Gottlieb later worked as an analyst at Sanford C. Bernstein & Co. He is also a regular speaker at hedge fund conferences.

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