WEBVTT - Bloomberg's Foxman on Death of Visium's Sanjay Valvani (Audio)

0:00:01.560 --> 0:00:04.840
<v Speaker 1>This is taking Stock with Kathleen Hayes and Pim Fox

0:00:05.000 --> 0:00:09.719
<v Speaker 1>on Bloomberg Radio. Last week, Sanjay Bobani, partner at hedge

0:00:09.720 --> 0:00:15.680
<v Speaker 1>fund Visium Asset Management, was arrested on insider trading charges

0:00:15.920 --> 0:00:20.479
<v Speaker 1>that led to Visium's decision to liquidate four of its

0:00:20.520 --> 0:00:24.440
<v Speaker 1>hedge funds. Last night, New York City police were called

0:00:24.480 --> 0:00:26.840
<v Speaker 1>to his home, where they found a knife near his

0:00:26.920 --> 0:00:31.360
<v Speaker 1>body and a suicide note. He was forty four years old.

0:00:31.880 --> 0:00:34.519
<v Speaker 1>Let's step back and ask what this means for the

0:00:34.560 --> 0:00:37.760
<v Speaker 1>hedge fund industry, certainly of vulnerable time, and of course

0:00:37.760 --> 0:00:40.599
<v Speaker 1>we express our sympathy to all his friends and colleagues

0:00:40.640 --> 0:00:43.839
<v Speaker 1>of Visium and to his family. Simone Foxman joins us.

0:00:43.880 --> 0:00:47.040
<v Speaker 1>Now she's hedge fund reporter at Bloomberg News. So someone

0:00:47.040 --> 0:00:49.200
<v Speaker 1>tell us a little bit more about this hedge fund,

0:00:49.240 --> 0:00:53.640
<v Speaker 1>how it operated, and what he was charged with. So Visium,

0:00:53.760 --> 0:00:57.080
<v Speaker 1>the asset management was, you know, as of earlier this year,

0:00:57.120 --> 0:01:01.200
<v Speaker 1>an eight billion dollar hedge fund. Initially it was it

0:01:01.240 --> 0:01:06.360
<v Speaker 1>was healthcare related, and its founder, Jacob Gotlieb decided um

0:01:06.800 --> 0:01:09.920
<v Speaker 1>to to branch out. His idea was to create that

0:01:09.959 --> 0:01:15.520
<v Speaker 1>sort of a multi strategy UM fund allah Millennium management.

0:01:15.520 --> 0:01:19.640
<v Speaker 1>That's azz the Englanders or Citadel Ken Griffin um. And

0:01:19.840 --> 0:01:21.920
<v Speaker 1>you know, certainly seemed things seem to be going that

0:01:21.959 --> 0:01:26.640
<v Speaker 1>way until the allegations first mentioned. He first mentioned to

0:01:26.640 --> 0:01:30.040
<v Speaker 1>two investors in March, and then last week we saw

0:01:30.360 --> 0:01:35.119
<v Speaker 1>the um that that those allegations were unsealed. UM. So uh,

0:01:35.240 --> 0:01:40.119
<v Speaker 1>Sanjay Valvani was a star trader there and really quite close. Uh.

0:01:40.319 --> 0:01:42.840
<v Speaker 1>It was very important at the firm. And so I

0:01:42.920 --> 0:01:46.360
<v Speaker 1>think this is certainly a surprise, um to the to

0:01:46.480 --> 0:01:48.760
<v Speaker 1>the industry at a whole. Whether it's surprising to people

0:01:48.760 --> 0:01:51.720
<v Speaker 1>at the firm is less clear. Now the U S

0:01:51.760 --> 0:01:56.559
<v Speaker 1>attorney had accused of Valfoni of paying a former Food

0:01:56.600 --> 0:02:00.600
<v Speaker 1>and Drug Administration employee to pass along tips about pending

0:02:01.160 --> 0:02:04.240
<v Speaker 1>drug approvals. I wonder if you could describe what that

0:02:04.280 --> 0:02:07.360
<v Speaker 1>means for the hedge fund industry, because it's not as

0:02:07.400 --> 0:02:10.679
<v Speaker 1>if this is the first time that drug approvals has

0:02:10.720 --> 0:02:13.840
<v Speaker 1>been in the spotline, right, and and this certainly seems

0:02:13.880 --> 0:02:17.160
<v Speaker 1>to be uh, you know, pharma certainly seems to be

0:02:17.200 --> 0:02:20.800
<v Speaker 1>an area where this is more likely um to happen

0:02:21.000 --> 0:02:25.160
<v Speaker 1>than perhaps other sectors because there's it's such a binary event.

0:02:25.160 --> 0:02:27.080
<v Speaker 1>Are you going to get the f DAI it's approval

0:02:27.200 --> 0:02:31.040
<v Speaker 1>or not um. You know, it's this is sort of

0:02:31.040 --> 0:02:34.960
<v Speaker 1>a really negative mark um for the hedge fund industry

0:02:35.040 --> 0:02:38.919
<v Speaker 1>right now. It's performance has been really tough um lagging

0:02:39.120 --> 0:02:42.200
<v Speaker 1>the the SMP five hundred index. You know, hedge ones

0:02:42.240 --> 0:02:44.560
<v Speaker 1>in the whole have been lagging the SMP five hundred

0:02:44.600 --> 0:02:47.079
<v Speaker 1>index for many years since the financial crisis. Well, I

0:02:47.120 --> 0:02:49.079
<v Speaker 1>think a lot of skeptics has always wondered if they

0:02:49.080 --> 0:02:51.720
<v Speaker 1>were really playing by the rules, because anyone would say,

0:02:51.760 --> 0:02:54.480
<v Speaker 1>if you cheat, it's a lot easier to win, it's

0:02:54.480 --> 0:02:56.560
<v Speaker 1>a lot easier to make money. What does this mean

0:02:56.600 --> 0:02:58.720
<v Speaker 1>for hedge funds going forward? Right and at the same

0:02:58.760 --> 0:03:01.400
<v Speaker 1>time as they're trying to just to fy their hefty fees,

0:03:02.200 --> 0:03:05.120
<v Speaker 1>you know, you're seeing this very high profile case come

0:03:05.200 --> 0:03:09.080
<v Speaker 1>forward at hedge fund that had spectacus pretty spectacular returns

0:03:09.080 --> 0:03:11.080
<v Speaker 1>of the last couple of years, and it really makes

0:03:11.080 --> 0:03:13.560
<v Speaker 1>you question. You know, this friendship went back a while

0:03:13.720 --> 0:03:17.240
<v Speaker 1>between this star trader at museum and the FDA official,

0:03:17.520 --> 0:03:20.079
<v Speaker 1>So it really makes you question where those returns came

0:03:20.120 --> 0:03:24.079
<v Speaker 1>from and how much how much people knew as far

0:03:24.240 --> 0:03:29.119
<v Speaker 1>as this case. What happens now because there are other

0:03:29.160 --> 0:03:33.560
<v Speaker 1>people that were implicated and charged with this particular case, right,

0:03:33.560 --> 0:03:36.560
<v Speaker 1>and there are two parts of the case UM. This

0:03:36.560 --> 0:03:42.280
<v Speaker 1>this insider trading piece UM. Both both Valvani and UM

0:03:42.520 --> 0:03:48.000
<v Speaker 1>another UM money manager Chris Platford, were implicated in this case.

0:03:48.560 --> 0:03:52.120
<v Speaker 1>UM Platford as well as the the f d A,

0:03:52.320 --> 0:03:56.680
<v Speaker 1>the formal official had been had pled guilty. There is

0:03:56.680 --> 0:04:01.480
<v Speaker 1>a whole another side of of this UM of these accusations,

0:04:01.480 --> 0:04:04.960
<v Speaker 1>and that's the mismarking of of bonds and that's sort

0:04:04.960 --> 0:04:07.840
<v Speaker 1>of somewhat pretty separate from from this. It was a

0:04:07.880 --> 0:04:12.400
<v Speaker 1>two pronged investigation UM. So that certainly, I mean, these

0:04:12.440 --> 0:04:15.360
<v Speaker 1>things are still ongoing. Uh, you know, remains to be

0:04:15.440 --> 0:04:19.000
<v Speaker 1>seen how this will impact the other sentences and the

0:04:19.000 --> 0:04:22.279
<v Speaker 1>cases going forward. Thank you very much. A Simone Foxman,

0:04:22.520 --> 0:04:25.479
<v Speaker 1>hedge fund reporter for a Bloomberg News. You can follow

0:04:25.600 --> 0:04:28.480
<v Speaker 1>Simone on Twitter at Simone Foxman.