Before an insider trading scandal shut down the healthcare hedge fund Visium its assets amounted to almost eight billion dollars. Three Visium portfolio managers were at the center of the scandal. Research conducted by the Wall Street Journal revealed that from 2001-2015 the fund yielded A 14.3% return. From January to May of 2016 the value of Visium’s premier fund dropped by 9.3%.
No charges were levied against Visium’s founder Jacob Gottlieb. A medical doctor who started investing as a teenager. Gottlieb states that he invests for the love of it. During the two years, it took him to liquidate the hedge fund’s assets Jacob Gottlieb received no pay.
The main players in the insider trading scheme were Visium portfolio managers Sanjay Valvani and Christopher Plaford. Valvani received information on drugs the Food and Drug Administration would be approving from former FDA employee Gordon Johnson. Valvani and Plaford used the information to make investments that netted them $25 million.
After being charged Sanjay Valvani was found dead of a self-inflicted neck wound. Christopher Plaford is still awaiting sentencing.
A third former Visium fund manager Stefan Lumiere received 18 months imprisonment and a $1 million fine for mismarking funds. Upon his release, Lumiere will spend three years on supervised probation. His punishment also includes a lifetime ban from ever being employed in the securities industry.
After the dissolution of Visium Jacob Gottlieb formed Altium Capital to oversee his own stock portfolio. Recently, Gottlieb hinted that he might be establishing another healthcare hedge fund.
The spike in the number of healthcare companies going public has Gottlieb thinking the time is ripe for the type of hedge fund he is contemplating. If the new health care hedge fund comes to fruition Jacob Gottlieb states that investments will be based on “thoughtful, methodical research.”