Visium Executive Says D.C. Insider Was Health-Care SourceBy
Christopher Plaford said he traded securities based on tip
Visium’s Stefan Lumiere on trial for securities fraud
A prominent Washington health-care consultant passed confidential government information to a former portfolio manager for Visium Asset Management LP who then used it to trade securities in advance of the public announcement, according to testimony in a securities-fraud trial Tuesday.
Christopher Plaford, who oversaw a credit fund at Visium, testified that David Blaszczak, founder of political intelligence firm Precipio Health Strategies, told him the Centers for Medicare & Medicaid Services, known as CMS, would soon reduce reimbursement rates for home health-care services. Plaford said he used the information to trade in the securities of Gentiva Health Services Inc. and Amedisys Inc.
Blaszczak didn’t immediately respond to a message left on his office voicemail. He hasn’t been charged in the investigation of Visium executives for insider trading and inflating the value of securities holdings. Blaszczak hasn’t been charged with wrongdoing and his name hasn’t been referenced in court papers related to the Visium trial. Plaford’s testimony Tuesday was the first time Blaszczak has been publicly named in connection with the case.
Plaford has pleaded guilty and is cooperating with prosecutors as part of a criminal case against former Visium executive Stefan Lumiere, who is on trial for mismarking bonds.
Multiple media reports have said Blaszczak is the subject of a U.S. investigation, as authorities have cracked down on funds’ use of political intelligence firms to shape their investment strategy. In November, Bloomberg reported that Deerfield Management Co., a $7 billion firm that invests in health-care companies, received a subpoena from U.S. authorities over its dealings with Blaszczak.
Plaford, 39, testified that Blaszczak was one of the consultants Visium employed for insight into how policy decisions might affect their investment holdings. In 2013, before the CMS announced it would reduce home health-care reimbursement rates, Plaford said he got that information from Blaszczak, who previously worked for CMS.
"I used it to inform trades," Plaford testified.
Gordon Johnston, a former U.S. Food and Drug Administration official who allegedly provided illegal trading tips to Visium, pleaded guilty and agreed to pay about $127,500 to settle with regulators.