Visium to Close Flagship Fund, Sell Smaller One to AllianceBernstein

Jun 17 2016 | 8:35pm ET

Visium Asset Management will shutter its flagship Visium Balanced fund and will sell its Visium Global fund to AllianceBernstein just two days after U.S. authorities charged several current and former Visium portfolio managers with securities fraud and insider trading offenses related to FDA drug approvals.

The company’s hedge funds have reportedly suffered billions in redemptions since the existence of the federal probe was disclosed in March, according to The Wall Street Journal.

“Given the uncertainty relative to the final outcome of the recent regulatory developments, the negative impact of the resulting publicity, and the substantial investor withdrawals, it became clear that maintaining the status quo was increasingly untenable,” said Visium founder and CEO Jacob Gottlieb in an investor letter quoted by the Journal.

The main fund, which is down more than 9% for the year to date through mid-June, will be liquidated and capital returned to investors less a reserve for future liabilities. AllianceBernstein, meanwhile, will buy Visium’s $2.5 billion equity-focused Global fund in a deal partially contingent on the level of assets under management remaining when the transaction closes. 

Gottlieb, a physician, founded new York-based Visium in 2005 after a stint at Balyasny Asset Management, which spun it off into a new firm. The firm started 2016 with more than $8 billion in total assets under management across all strategies, although it has received at least $2 billion in redemption requests since the end of March, according to Bloomberg data.

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