Visium Winds Down Global Fund as Citadel Hires 17 Managers

Visium: Downfall of an $8 Billion Hedge Fund
  • Visium had planned to sell the fund to AllianceBernstein
  • Firm previously announced the liquidation of four other funds

Visium Asset Management, which had struck a preliminary deal to sell its multisector hedge fund to AllianceBernstein Holding LP after three of its former traders were charged with securities fraud, told investors in a letter that it now plans to wind down the fund.

The Visium Global Fund, which had $2.3 billion in assets as of May 31, had been the last remaining hedge fund at the New York-based firm. Ken Griffin’s Citadel hired 17 Visium money managers, most of them coming from the Global Fund, according to a person with knowledge of the matter.

Officials at Citadel and Visium declined to comment. Jonathan Freedman, a spokesman for AllianceBernstein, declined to comment on the state of the agreement with Visium.

Visium, founded by Jacob Gottlieb, last month signed a letter of intent to sell the multistrategy fund to AllianceBernstein -- which was to acquire its investment professionals and some support staff -- days after one of the company’s star managers was accused of insider trading and two former employees were charged with mismarking securities. The firm, which earlier this year managed $8 billion in assets, already announced the closing of four other funds, including the flagship Balanced Fund.

The firm also told clients that its auditor KPMG had resigned and it had hired PKF O’Connor Davies for the firm’s 2015 audit. The transition won’t delay the return of investor money, the firm said.

Bob Wade, a spokesman for KPMG, declined to comment.

Citadel’s Hires

Citadel’s new hires will oversee equities across multiple sectors and report to Richard Schimel, who joined billionaire Griffin’s firm last month to run a new equity unit, Aptigon Capital, said the person, who asked not to be named because the decision is private. They will be based in San Francisco and New York. While some of the hires will focus on healthcare investing, the majority will specialize in sectors outside of that field, the person said.

Talks between Citadel and the Visium employees began shortly after Gottlieb notified investors of his decision to liquidate the hedge funds, the person said. Visium said yesterday it’s cutting 33 employees in New York, starting in October.

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