Visium Sues Widow of Portfolio Manager Who Died by Suicide

A hedge fund that closed after securities regulators accused the firm of insider trading is seeking more than $100 million from the estate of one of its former portfolio managers.

Visium Asset Management LP filed the complaint earlier this month in New York Supreme Court under a new name, VA Management LP. The firm said it is seeking more than $100 million it paid to money manager

Sanjay Valvani

from 2007 through 2016, and “the investigative and legal fees and all other losses resulting from Valvani’s breach of fiduciary duty.”

The New York Post earlier reported the filing.

In 2016, federal prosecutors charged Mr. Valvani with trading on confidential government information about generic-drug approvals. Mr. Valvani, who was a partner at Visium’s health-care focused fund, pleaded not guilty.

Days after he was charged, Mr. Valvani was found dead in his Brooklyn home in an apparent suicide. At the time of his death, Mr. Valvani’s attorneys said “the charges against him were only unproven accusations and he had always maintained his innocence.”

The lawsuit named Mr. Valvani’s estate as a defendant, as well as the estate’s administrator,

Harjot Kaur Sandhu.

Ms. Sandhu is Mr. Valvani’s widow.

“It would be fundamentally unfair for Valvani’s past illegal activity and his violation of his fiduciary duties to be permitted to perpetuate a super luxurious lifestyle for his spouse by living off ill-gotten gains,” Visium said in its complaint. Visium also said “Valvani’s family is protected by a $10 million insurance trust” and that it wouldn’t go after that money.

In a statement, lawyers for Ms. Sandhu said the lawsuit “has no merit.”

“Mr. Valvani was a loyal employee who acted in good faith,” said

Justine Harris

and

Michael Tremonte

of Sher Tremonte LLP. “It is particularly ironic that the same company that enabled, encouraged and profited from Mr. Valvani’s work is now coming after his estate. We look forward to demonstrating that these claims, which needlessly retraumatize Mr. Valvani’s family, are completely baseless.”

Visium managed about $8 billion at the start of 2016 before it began winding down later that year in the fallout from the insider-trading allegations. In 2018, the company agreed to pay more than $10 million to settle allegations that included breaking insider-trading rules when it traded drug-company stocks. The firm didn’t admit or deny the allegations by the Securities and Exchange Commission.

More recently, Visium’s founder,

Jacob Gottlieb,

has been managing his fortune within a family office. Last year, he told The Wall Street Journal he was considering raising money for a new hedge fund. Mr. Gottlieb wasn’t charged with wrongdoing.

A spokesman for Mr. Gottlieb and Visium declined to comment.

Write to Rachael Levy at rachael.levy@wsj.com

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