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.
Enforcement
- 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.
