Speaker 1: This is taking Stock with Kathleen Hayes and Pim Fox
Speaker 1: on Bloomberg Radio. Last week, Sanjay Bobani, partner at hedge
Speaker 1: fund Visium Asset Management, was arrested on insider trading charges
Speaker 1: that led to Visium's decision to liquidate four of its
Speaker 1: hedge funds. Last night, New York City police were called
Speaker 1: to his home, where they found a knife near his
Speaker 1: body and a suicide note. He was forty four years old.
Speaker 1: Let's step back and ask what this means for the
Speaker 1: hedge fund industry, certainly of vulnerable time, and of course
Speaker 1: we express our sympathy to all his friends and colleagues
Speaker 1: of Visium and to his family. Simone Foxman joins us.
Speaker 1: Now she's hedge fund reporter at Bloomberg News. So someone
Speaker 1: tell us a little bit more about this hedge fund,
Speaker 1: how it operated, and what he was charged with. So Visium,
Speaker 1: the asset management was, you know, as of earlier this year,
Speaker 1: an eight billion dollar hedge fund. Initially it was it
Speaker 1: was healthcare related, and its founder, Jacob Gotlieb decided um
Speaker 1: to to branch out. His idea was to create that
Speaker 1: sort of a multi strategy UM fund allah Millennium management.
Speaker 1: That's azz the Englanders or Citadel Ken Griffin um. And
Speaker 1: you know, certainly seemed things seem to be going that
Speaker 1: way until the allegations first mentioned. He first mentioned to
Speaker 1: two investors in March, and then last week we saw
Speaker 1: the um that that those allegations were unsealed. UM. So uh,
Speaker 1: Sanjay Valvani was a star trader there and really quite close. Uh.
Speaker 1: It was very important at the firm. And so I
Speaker 1: think this is certainly a surprise, um to the to
Speaker 1: the industry at a whole. Whether it's surprising to people
Speaker 1: at the firm is less clear. Now the U S
Speaker 1: attorney had accused of Valfoni of paying a former Food
Speaker 1: and Drug Administration employee to pass along tips about pending
Speaker 1: drug approvals. I wonder if you could describe what that
Speaker 1: means for the hedge fund industry, because it's not as
Speaker 1: if this is the first time that drug approvals has
Speaker 1: been in the spotline, right, and and this certainly seems
Speaker 1: to be uh, you know, pharma certainly seems to be
Speaker 1: an area where this is more likely um to happen
Speaker 1: than perhaps other sectors because there's it's such a binary event.
Speaker 1: Are you going to get the f DAI it's approval
Speaker 1: or not um. You know, it's this is sort of
Speaker 1: a really negative mark um for the hedge fund industry
Speaker 1: right now. It's performance has been really tough um lagging
Speaker 1: the the SMP five hundred index. You know, hedge ones
Speaker 1: in the whole have been lagging the SMP five hundred
Speaker 1: index for many years since the financial crisis. Well, I
Speaker 1: think a lot of skeptics has always wondered if they
Speaker 1: were really playing by the rules, because anyone would say,
Speaker 1: if you cheat, it's a lot easier to win, it's
Speaker 1: a lot easier to make money. What does this mean
Speaker 1: for hedge funds going forward? Right and at the same
Speaker 1: time as they're trying to just to fy their hefty fees,
Speaker 1: you know, you're seeing this very high profile case come
Speaker 1: forward at hedge fund that had spectacus pretty spectacular returns
Speaker 1: of the last couple of years, and it really makes
Speaker 1: you question. You know, this friendship went back a while
Speaker 1: between this star trader at museum and the FDA official,
Speaker 1: So it really makes you question where those returns came
Speaker 1: from and how much how much people knew as far
Speaker 1: as this case. What happens now because there are other
Speaker 1: people that were implicated and charged with this particular case, right,
Speaker 1: and there are two parts of the case UM. This
Speaker 1: this insider trading piece UM. Both both Valvani and UM
Speaker 1: another UM money manager Chris Platford, were implicated in this case.
Speaker 1: UM Platford as well as the the f d A,
Speaker 1: the formal official had been had pled guilty. There is
Speaker 1: a whole another side of of this UM of these accusations,
Speaker 1: and that's the mismarking of of bonds and that's sort
Speaker 1: of somewhat pretty separate from from this. It was a
Speaker 1: two pronged investigation UM. So that certainly, I mean, these
Speaker 1: things are still ongoing. Uh, you know, remains to be
Speaker 1: seen how this will impact the other sentences and the
Speaker 1: cases going forward. Thank you very much. A Simone Foxman,
Speaker 1: hedge fund reporter for a Bloomberg News. You can follow
Speaker 1: Simone on Twitter at Simone Foxman.