Ex-Visium fund manager convicted of fraud by Manhattan jury
A former portfolio manager at Visium Asset Management LP was convicted of securities fraud on Thursday, following a trial that stemmed from a federal investigation that led to the New York-based hedge fund’s closure last year.
Stefan Lumiere, whose sister was married to Visium founder Jacob Gottlieb when he worked at the hedge fund, was found guilty by a federal jury in Manhattan of conspiracy, securities fraud and wire fraud charges.
The verdict came after less than two hours of deliberations by the 12 jurors. Eric Creizman, Lumiere’s lawyer, told reporters his client would likely appeal, while Lumiere’s family reacted angrily to the verdict.
“Obviously this is a court of law, not a court of justice,” said Alexandra Lumiere Gottlieb, who Jacob Gottlieb filed for divorce from in 2012.
U.S. District Judge Jed Rakoff scheduled Lumiere’s sentencing for May 23.
The trial follows a probe of Visium that prompted the $8 billion firm’s wind-down and charges against three others, including Sanjay Valvani, a portfolio manager who committed suicide in June after being accused of insider trading.
Prosecutors said Lumiere, 46, and others conspired from 2011 to 2013 to mismark the value of securities held by a bond fund, which invested in debt issued by healthcare companies and which in 2012 reported peak net assets of $471.5 million.
Lumiere and others rigged the process of valuing the Visium Credit Opportunities Fund’s distressed-debt holdings by, among other things, obtaining sham quotes from brokers, who gave them the inflated values they wanted, prosecutors said.
“Lumiere put garbage into the process, and garbage got spit out right back to investors,” Assistant U.S. Attorney Joshua Naftalis told jurors during his closing argument earlier on Thursday.
Creizman countered that Lumiere had no incentive to knowingly break the law, calling him the “low man on the totem pole” at Visium, where his boss thought he did a poor job and where Gottlieb was in the midst of divorcing Lumiere’s sister.
“Stefan Lumiere had no motive to commit this crime,” he said in his closing argument.
At trial, prosecutors called as cooperating witnesses Christopher Plaford, who pleaded guilty in June, and Jason Thorell, a former trader who reported his concerns to the U.S. Securities and Exchange Commission.
According to court testimony, Thorell, who at the Federal Bureau of Investigation’s direction recorded Lumiere, is seeking a potential financial reward under the SEC’s whistleblower program.
The case is U.S. v. Lumiere, U.S. District Court, Southern District of New York, No. 16-cr-00483.
(Reporting by Nate Raymond in New York; Editing by Bernard Orr and Lisa Shumaker)