Sanjay Valvani, a portfolio manager at Visium Asset Management who was charged with insider trading last week, was found dead on Monday, June 18th night. The 44-year-old Sanjay Valvani’s body was discovered by his wife in their Brooklyn, N.Y. home. Valvani, who was on the floor of their bedroom, had a wound on his neck and a knife near the body. Valvani’s wife also discovered a suicide note, according to a spokeswoman from the New York Police Department.
Valvani was accused of committing securities and wire fraud with a former senior Food and Drug Administration official, Gordon Johnston, from about 2005 through 2011. Valvani “unlawfully obtained highly confidential and material nonpublic information from the FDA about the agency’s approval of pending generic drug applications,” according to the US attorney’s statement. Valvani was also charged with passing material nonpublic info to Chris Plaford, a former Visium portfolio manager, who allegedly traded on that info. Johnston and Plaford have pleaded guilty and admitted their participation in the scheme.
Valvani had turned himself in to authorities last week, after having been charged with netting about $25 million for an unnamed investment firm using inside information on the pending approval of a generic drug. Valvani had pleaded not guilty.
“This is a horrible tragedy that is difficult to comprehend,” Valvani’s lawyer, Barry Berke, and partner Eric Tirschwell said in a statement. “We hope for the sake of his family and his memory that it will not be forgotten that the charges against him were only unproven accusations and he had always maintained his innocence.”
Visium had placed Valvani on leave earlier this year after it announced that it was under investigation. The hedge fund said on that it would shut down its operations. Valvani had faced numerous charges, according to the complaint:
The complaint said Valvani instructed Johnston, the former FDA official, about the status and approval of a generic drug, and Johnston passed along that info back to Valvani. Valvani was accused of using that info to bet on two pharma companies that were likely to be affected by the inside tip, allegedly netting about $25 million in trading profits. Valvani was also accused of tipping off Plaford on this info. A representative for the Department of Justice declined to comment on whether Valvani’s death would affect the case.
“This is a horrible tragedy that is difficult to comprehend. Sanjay Valvani was a loving father, husband, son and brother and committed friend, colleague and mentor,” Valvani’s lawyers, Barry Berke and Eric Tirschwell wrote in a statement. “We hope for the sake of his family and his memory that it will not be forgotten that the charges against him were only unproven accusations and he had always maintained his innocence.”
The case, which is one of biggest to hit the hedge fund industry in the past few years, could also mark the end of Visium. Though Visium, headed by Jacob Gottlieb, has not been charged with any wrongdoing, it sold one fund and shut down the rest just days after the SEC charged Valvani,
Valvani, who had been with the firm since its inception in 2005, was put on paid leave in April, when Visium revealed it was under federal investigation. Valvani had followed Gottlieb from Balynsny Asset Management to Visium. “Given the uncertainty relative to the final outcome of the recent regulatory developments, the negative impact of the resulting publicity, and the substantial investor withdrawals, it became clear that maintaining the status quo was increasingly untenable,” Gottlieb wrote in a letter to investors, the Wall Street Journal reported.
“In the beginning, I really had to convince Jacob Gottlieb that I was hungry to join his hedge fund,” Valvani said in a 2012 profile for Duke’s Fuqua School of Business. “But I believed in myself, my education and my experience. I work hard and try to be the best at what I do, which is why a hedge fund is so suitable for me—here I have a lot of control over my own destiny.”
