Visium Asset Management will close and sell or wind down its five hedge fund strategies.
The announcement of the company's closure due to “recent regulatory developments, the negative impact of resulting publicity and the substantial investor withdrawals” was made by Jacob J. Gottlieb, the firm's managing partner and chief investment officer, in a June 17 letter to investors that was obtained by Pensions & Investments.
On June 15, the Securities and Exchange Commission charged two Visium employees with insider trading in civil suits, according to an SEC news release. One of the two and a third defendant are charged with falsely inflating the value of securities in one of Visium's hedge funds. The trio face parallel criminal charges filed by the U.S. Attorney for the Southern District of New York, the SEC news release said. All of the cases have been filed in federal court in Manhattan.
AllianceBernstein signed a letter of intent to assume management of the Visium Global Fund, a long/short equity hedge fund. The fund's investment team and some support staff will join the firm, an AllianceBernstein news release said. The transaction is subject to conditions, including any required investor approvals.
Mr. Gottlieb said in the letter that he will not be joining AllianceBernstein, but will work with AB during the ownership transition and remain an investor in the fund.
The firm's flagship multistrategy hedge fund, Visium Balanced Fund, as well as the Visium Institutional Partners Fund, Visium Alpha Equity Fund and the Visium Alpha Equity UCITS Fund will be closed, Mr. Gottlieb's letter said. Redemptions by investors in the balanced fund likely will begin in late July, but will be subject to a 3% to 5% withholding to establish a reserve for potential liabilities and other “contingencies … including those associated with the regulatory inquiries,” according to the letter.
Mr. Gottlieb could not be reached for additional comment and Jonathan Gasthalter, a company spokesman, declined to comment.
Visium has about $7 billion under management, much of it for institutional investors, including the $70.9 billion New Jersey Pension Fund, Trenton; the $54.9 billion Michigan Retirement Systems, Lansing; the $12.3 billion Ohio School Employees Retirement System, Columbus; the $3 billion foundation of Hartford Healthcare, Hartford, Conn.; and the $228 million Adams County Retirement Plan, Brighton, Colo.