- AllianceBernstein signs letter of intent to take over fund
- Fund’s investment staff, some support staff would move
Visium Asset Management, the hedge fund firm that’s battling redemptions after it revealed it was under investigation by authorities, agreed to sell its multi-sector hedge fund, Visium Global, to AllianceBernstein Holding LP. No terms were given.
AllianceBernstein signed a letter of intent to assume management of the fund, according to a statement Friday from the New York-based investment and research firm. As part of the deal, the fund’s investment professionals and some support staff would join AllianceBernstein, the company said.
The agreement comes two days after Sanjay Valvani, a partner and money manager at Visium, was accused by the U.S. government of insider trading and reaping more than $32 million from trades in drug companies using secret tips. Visium, which told clients in March that it was being investigated by the government for its use of a consultant and trading in certain securities as well as the valuation of a credit fund that closed in 2013, has received at least $2 billion in redemption requests this quarter.
The deal is “subject to completing due diligence, agreement on transaction documentation and customary closing conditions, including any required investor approvals,” AllianceBernstein said in the statement.
Valvani ran a portion of Visium’s main fund, the Visium Balanced Fund, which is different from the Global Fund that’s being sold. U.S. prosecutors revealed on Wednesday that, in addition to Valvani, two former Visium employees were also charged with securities fraud. Visium, which had $7 billion under management as of March 31, and its founder Jacob Gottlieb weren’t accused of wrongdoing.
Visium is the biggest hedge fund to have employees linked to criminal wrongdoing since the government set its sights on Steven A. Cohen’s SAC Capital Advisors. Cohen’s fund, which pleaded guilty to federal insider-trading charges in 2013 and agreed to pay $1.8 billion, was forced to shut its doors.
At the end of March, $2.4 billion was invested in the Global Fund strategy, according to an investor document obtained by Bloomberg. Started as a standalone vehicle in 2009, the fund marked Gottlieb’s most successful attempt to expand the firm beyond healthcare stocks.
Gottlieb started his career after medical school as a buyside analyst at Sanford C. Bernstein, which was bought in October 2000 by Alliance Capital to form AllianceBernstein. He was there from 1998 until 2000, according to his LinkedIn profile.
As of last year, Visium managed five hedge funds and a mutual fund, and was seeking to raise $500 million for a private equity vehicle. The multistrategy fund lost 2.85 percent this year through May, one of the people said, after rising more than 10 percent last year.