Visium Being Probed by U.S. Over Valuation in Credit Fund

  • SEC, Department of Justice looking at fund that closed 2013
  • Probe also examining use of consultant firm employed until '11

Visium Asset Management told investors it’s being probed by U.S. securities regulators and the Department of Justice, which have requested information related to the valuation of securities in a credit fund that closed in 2013.

The government has also asked about the trading of “certain securities, including the use of a consultant who stopped providing services to the firm in 2011,” Jacob Gottlieb, chief investment officer of the $8 billion multistrategy hedge fund firm, wrote in a letter to investors.

Visium is complying with the government’s request, according to the letter, dated Monday. A spokesman for Visium wouldn’t immediately comment. The Wall Street Journal reported the investigation earlier Monday.

“We are providing the requested information to the government,” Gottlieb wrote in the letter. “We expect only the highest ethical conduct from all our employees.”

Gottlieb, a medical school graduate who later turned to a career in finance, founded Visium in 2005 and expanded it beyond its roots in trading equities tied to the health-care industry. The firm manages about $8 billion today and employs more than 170 people in New York, London, and San Francisco. 

Visium’s Credit Opportunities Fund opened in 2009 and focused on capital structure arbitrage in healthcare. The fund surged 32 percent in 2010, before returns declined. It rose 0.7 percent in 2011 and 5.8 percent in 2012, Bloomberg reported in June 2013.

The firm’s flagship Balanced Fund returned about 5.6 percent last year, while the Visium Global Fund handed investors a return of 10.2 percent, according to a person with knowledge of the matter who asked not to be identified because the information is private. Both funds have lost money this year, the person said.

The two funds “have liquid portfolios and we remain focused on achieving superior returns for our investors,” Gottlieb wrote. “We are in contact with our advisors as we work through this matter and will continue to proactively and diligently manage the situation.”

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