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Regulatory Sanctions

Hedge Fund Firm and CFO Charged by SEC

May 9, 2018

Visium Asset Management, a hedge fund advisor, agreed pay over $10 million to settle SEC charges related to asset mismarking and insider trading by its privately managed hedge funds and portfolio managers. Separately, Visium CFO Steven Ku agreed to pay a $100,000 fine and serve a 12-month suspension to settle SEC charges that he failed to respond appropriately to red flags that should have alerted him to the asset mismarking.


SEC FINDINGS re: VISIUM.    Two portfolio managers of the New York-based advisor falsely inflated the value of securities held by hedge funds it advised, causing the funds to falsely inflate returns, overstate their aggregate net asset value, and pay approximately $3.15 million in excess fees to Visium. The mismarking scheme ran from at least July 2011 to December 2012. In addition, certain Visium portfolio managers traded on confidential insider information received from former government officials who are working as paid consultants to Visium. 


SEC FINDINGS re: KU.    Visium CFO Steven Ku failed reasonably to supervise 2 portfolio managers, Christopher Plaford and Stefan Lumiere, who perpetrated the asset mismarking scheme. Ku failed to respond appropriately to red flags that should have alerted him to their misconduct. These red flags included (i) the frequency with which these portfolio managers used price overrides; and, (ii) the fact that the overrides almost always resulted in higher valuations for the Credit Fund.


[Click here for further details on the SEC Complaints pertaining to Steven Ku and Visium Asset Management.]