1 00:00:01,560 --> 00:00:04,840 Speaker 1: This is taking Stock with Kathleen Hayes and Pim Fox 2 00:00:05,000 --> 00:00:09,719 Speaker 1: on Bloomberg Radio. Last week, Sanjay Bobani, partner at hedge 3 00:00:09,720 --> 00:00:15,680 Speaker 1: fund Visium Asset Management, was arrested on insider trading charges 4 00:00:15,920 --> 00:00:20,479 Speaker 1: that led to Visium's decision to liquidate four of its 5 00:00:20,520 --> 00:00:24,440 Speaker 1: hedge funds. Last night, New York City police were called 6 00:00:24,480 --> 00:00:26,840 Speaker 1: to his home, where they found a knife near his 7 00:00:26,920 --> 00:00:31,360 Speaker 1: body and a suicide note. He was forty four years old. 8 00:00:31,880 --> 00:00:34,519 Speaker 1: Let's step back and ask what this means for the 9 00:00:34,560 --> 00:00:37,760 Speaker 1: hedge fund industry, certainly of vulnerable time, and of course 10 00:00:37,760 --> 00:00:40,599 Speaker 1: we express our sympathy to all his friends and colleagues 11 00:00:40,640 --> 00:00:43,839 Speaker 1: of Visium and to his family. Simone Foxman joins us. 12 00:00:43,880 --> 00:00:47,040 Speaker 1: Now she's hedge fund reporter at Bloomberg News. So someone 13 00:00:47,040 --> 00:00:49,200 Speaker 1: tell us a little bit more about this hedge fund, 14 00:00:49,240 --> 00:00:53,640 Speaker 1: how it operated, and what he was charged with. So Visium, 15 00:00:53,760 --> 00:00:57,080 Speaker 1: the asset management was, you know, as of earlier this year, 16 00:00:57,120 --> 00:01:01,200 Speaker 1: an eight billion dollar hedge fund. Initially it was it 17 00:01:01,240 --> 00:01:06,360 Speaker 1: was healthcare related, and its founder, Jacob Gotlieb decided um 18 00:01:06,800 --> 00:01:09,920 Speaker 1: to to branch out. His idea was to create that 19 00:01:09,959 --> 00:01:15,520 Speaker 1: sort of a multi strategy UM fund allah Millennium management. 20 00:01:15,520 --> 00:01:19,640 Speaker 1: That's azz the Englanders or Citadel Ken Griffin um. And 21 00:01:19,840 --> 00:01:21,920 Speaker 1: you know, certainly seemed things seem to be going that 22 00:01:21,959 --> 00:01:26,640 Speaker 1: way until the allegations first mentioned. He first mentioned to 23 00:01:26,640 --> 00:01:30,040 Speaker 1: two investors in March, and then last week we saw 24 00:01:30,360 --> 00:01:35,119 Speaker 1: the um that that those allegations were unsealed. UM. So uh, 25 00:01:35,240 --> 00:01:40,119 Speaker 1: Sanjay Valvani was a star trader there and really quite close. Uh. 26 00:01:40,319 --> 00:01:42,840 Speaker 1: It was very important at the firm. And so I 27 00:01:42,920 --> 00:01:46,360 Speaker 1: think this is certainly a surprise, um to the to 28 00:01:46,480 --> 00:01:48,760 Speaker 1: the industry at a whole. Whether it's surprising to people 29 00:01:48,760 --> 00:01:51,720 Speaker 1: at the firm is less clear. Now the U S 30 00:01:51,760 --> 00:01:56,559 Speaker 1: attorney had accused of Valfoni of paying a former Food 31 00:01:56,600 --> 00:02:00,600 Speaker 1: and Drug Administration employee to pass along tips about pending 32 00:02:01,160 --> 00:02:04,240 Speaker 1: drug approvals. I wonder if you could describe what that 33 00:02:04,280 --> 00:02:07,360 Speaker 1: means for the hedge fund industry, because it's not as 34 00:02:07,400 --> 00:02:10,679 Speaker 1: if this is the first time that drug approvals has 35 00:02:10,720 --> 00:02:13,840 Speaker 1: been in the spotline, right, and and this certainly seems 36 00:02:13,880 --> 00:02:17,160 Speaker 1: to be uh, you know, pharma certainly seems to be 37 00:02:17,200 --> 00:02:20,800 Speaker 1: an area where this is more likely um to happen 38 00:02:21,000 --> 00:02:25,160 Speaker 1: than perhaps other sectors because there's it's such a binary event. 39 00:02:25,160 --> 00:02:27,080 Speaker 1: Are you going to get the f DAI it's approval 40 00:02:27,200 --> 00:02:31,040 Speaker 1: or not um. You know, it's this is sort of 41 00:02:31,040 --> 00:02:34,960 Speaker 1: a really negative mark um for the hedge fund industry 42 00:02:35,040 --> 00:02:38,919 Speaker 1: right now. It's performance has been really tough um lagging 43 00:02:39,120 --> 00:02:42,200 Speaker 1: the the SMP five hundred index. You know, hedge ones 44 00:02:42,240 --> 00:02:44,560 Speaker 1: in the whole have been lagging the SMP five hundred 45 00:02:44,600 --> 00:02:47,079 Speaker 1: index for many years since the financial crisis. Well, I 46 00:02:47,120 --> 00:02:49,079 Speaker 1: think a lot of skeptics has always wondered if they 47 00:02:49,080 --> 00:02:51,720 Speaker 1: were really playing by the rules, because anyone would say, 48 00:02:51,760 --> 00:02:54,480 Speaker 1: if you cheat, it's a lot easier to win, it's 49 00:02:54,480 --> 00:02:56,560 Speaker 1: a lot easier to make money. What does this mean 50 00:02:56,600 --> 00:02:58,720 Speaker 1: for hedge funds going forward? Right and at the same 51 00:02:58,760 --> 00:03:01,400 Speaker 1: time as they're trying to just to fy their hefty fees, 52 00:03:02,200 --> 00:03:05,120 Speaker 1: you know, you're seeing this very high profile case come 53 00:03:05,200 --> 00:03:09,080 Speaker 1: forward at hedge fund that had spectacus pretty spectacular returns 54 00:03:09,080 --> 00:03:11,080 Speaker 1: of the last couple of years, and it really makes 55 00:03:11,080 --> 00:03:13,560 Speaker 1: you question. You know, this friendship went back a while 56 00:03:13,720 --> 00:03:17,240 Speaker 1: between this star trader at museum and the FDA official, 57 00:03:17,520 --> 00:03:20,079 Speaker 1: So it really makes you question where those returns came 58 00:03:20,120 --> 00:03:24,079 Speaker 1: from and how much how much people knew as far 59 00:03:24,240 --> 00:03:29,119 Speaker 1: as this case. What happens now because there are other 60 00:03:29,160 --> 00:03:33,560 Speaker 1: people that were implicated and charged with this particular case, right, 61 00:03:33,560 --> 00:03:36,560 Speaker 1: and there are two parts of the case UM. This 62 00:03:36,560 --> 00:03:42,280 Speaker 1: this insider trading piece UM. Both both Valvani and UM 63 00:03:42,520 --> 00:03:48,000 Speaker 1: another UM money manager Chris Platford, were implicated in this case. 64 00:03:48,560 --> 00:03:52,120 Speaker 1: UM Platford as well as the the f d A, 65 00:03:52,320 --> 00:03:56,680 Speaker 1: the formal official had been had pled guilty. There is 66 00:03:56,680 --> 00:04:01,480 Speaker 1: a whole another side of of this UM of these accusations, 67 00:04:01,480 --> 00:04:04,960 Speaker 1: and that's the mismarking of of bonds and that's sort 68 00:04:04,960 --> 00:04:07,840 Speaker 1: of somewhat pretty separate from from this. It was a 69 00:04:07,880 --> 00:04:12,400 Speaker 1: two pronged investigation UM. So that certainly, I mean, these 70 00:04:12,440 --> 00:04:15,360 Speaker 1: things are still ongoing. Uh, you know, remains to be 71 00:04:15,440 --> 00:04:19,000 Speaker 1: seen how this will impact the other sentences and the 72 00:04:19,000 --> 00:04:22,279 Speaker 1: cases going forward. Thank you very much. A Simone Foxman, 73 00:04:22,520 --> 00:04:25,479 Speaker 1: hedge fund reporter for a Bloomberg News. You can follow 74 00:04:25,600 --> 00:04:28,480 Speaker 1: Simone on Twitter at Simone Foxman.