AllianceBernstein Calls Off Deal to Buy Visium’s Global Fund

  • Transaction ‘was not feasible,’ according to AllianceBernstein
  • Visium winding down hedge funds amid probe by U.S. authorities

AllianceBernstein Holding LP said it ended its effort to buy Visium Asset Management’s Global Fund, dealing another blow to the firm that once managed $8 billion and is now shuttering its hedge funds amid an investigation by U.S. authorities.

AllianceBernstein, which oversees about $490 billion, had struck a preliminary agreement to acquire the multisector hedge fund last month, after prosecutors charged three former Visium traders with securities fraud. Visium decided to shutter its four other hedge funds after the investigation spurred redemptions, then last week told clients it would also wind down the Global Fund.

“Having determined that an opportunity involving the Visium Global Fund was not feasible, we will not proceed with the transaction,” AllianceBernstein said in Wednesday’s statement.

Despite Visium’s decision to close the fund and Citadel’s poaching of several money managers, AllianceBernstein weighed a deal that would give it the right to market the global team’s historical returns, while providing the remaining managers a cash infusion, according to two people with knowledge of the matter. The global strategy returned an annual average of about 19 percent since its inception in 2007, two years before it became a standalone vehicle.

But the offer fell apart after Visium told investors that it would hold back about 1 percent of the Global Fund’s assets to help cover costs related to the investigation, said one of the people who asked not to be identified because the information is private. The decision raised concerns that new and existing clients might call into question the reputation of the fund, whose traders haven’t been accused of any wrongdoing, the person said.

Audit Pending

Visium also told investors that its auditor, KPMG, had resigned and it had hired PKF O’Connor Davies for the firm’s 2015 audit.

Jonathan Gasthalter, an outside spokesman for Visium, didn’t immediately reply to an e-mail seeking comment after regular business hours.

The Global Fund, which oversaw $2.3 billion as of May 31, will return 95 percent of its assets to investors by Aug. 30, Bloomberg reported last week. The remainder -- with the exception of the reserve -- will be paid upon completion of an audit.

Visium had already planned on retaining as much as 5 percent of investor money from its flagship Balanced Fund for “liabilities and other contingencies” including those related to the government lawsuit against the traders. One of the Balanced Fund’s money managers was charged by federal prosecutors with insider trading, while two former traders at a credit fund that closed in 2013 were accused of mismarking securities.

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