- Screenshot YouTube/Milken Institute
A big hedge fund transaction is hanging in the balance.
Visium Asset Management, a hedge fund at the heart of an insider-trading scandal that has outlined plans to shut down, in June inked a deal to sell one of its funds to AllianceBernstein.
Visium told investors on Wednesday that it will now unwind that fund, according to a person familiar with the matter, putting that transaction in doubt.
The firm is also changing its auditor to PKF O’Connor Davies from KPMG, the person said.
Visium Asset Management said that it would shut down after regulators said last month that several Visium employees had allegedly committed fraud and insider trading.
AllianceBernstein, which manages $487 billion, had been planning to buy one of Visium’s main hedge funds, a global equity-focused fund that is not the target of regulators’ inquiries.
Questions had been swirling around the proposed deal for some time. One person familiar with the matter said that the global fund had been expected to drop significantly in assets as investors yanked their money from the fund. It managed more than $2 billion as of earlier this year.
Several of its key portfolio managers also had left even before the proposed deal was announced, including Rohit Shah, who is moving to Caxton Associates, and Arnaud Saint-Sauveur, who is set to move to Lombard Odier, people familiar with the matter previously told Business Insider.
Visium previously had a stringent non-compete policy for its employees who wished to work at competing firms, but had been loosening those terms ever since the firm came under fire, people familiar with the matter said.
That’s a departure from last year, when Michael Kestenbaum, a portfolio manager on the global fund, looked to move to competitor Folger Hill and filed a suit against Visium to get out of his non-compete, according to public filings.
On Wednesday, Rob Copeland and Sarah Krouse at The Wall Street Journal reported that Ken Griffin’s Citadel has hired 17 portfolio managers from Visium. They could start as early as August, according to the report.
Visium’s global fund has been down this year, alongside the firm’s flagship healthcare hedge fund. Through June 30, the global fund is down 4.85%, according to an investor update seen by Business Insider. The healthcare fund, Visium Balanced, which is the target of the insider-trading investigation, is down 10.75% over the same period.
Business Insider also reported this week that someone is trying to sell an investment in Visium’s Balanced fund.
Representatives for Citadel did not respond to requests for comment. A representative for AllianceBernstein declined to comment on the state of the deal.