SEC Hedge Fund Insider Trade

On May 8, SEC issued $9mn hedge fund settlement insider trading.

  • Visium Asset Management was charged, for not supervising portfolio managers.

Alleged Violations

  • Ignored red flags of managers engaged in asset mismarking and insider trading.
  • Two managers falsely inflated value of securities held by hedge funds it advised.
  • Fund returns falsely inflated, overstated NAV, paid Visium $3.15mn excess fees.
  • Securities of pharma companies were traded before two generic drug approvals.
  • Trades based on information received from former FDA official working at Visium.
  • Securities of home healthcare providers were traded before a proposed cut to its
    Medicare reimbursement rates from Centers for Medicare and Medicaid Services.


  • Steven Ku did not supervise two managers, Christopher Plaford, Stefan Lumiere.
  • Visium must disgorge $4.7mn, with $720,711 interest and penalty over $4.7mn.
  • Ku was fined $100k, and suspended from securities industry for twelve months

Separate Order

  • Plaford and Lumiere, and ex-FDA official charged, among others, filed Jun. 2016.
  • Lumiere banned from industry based on the final judgment entered against him.
  • Case against Plaford was stayed pending the completion of parallel criminal case.