A hedge fund manager appears to have committed suicide less than a week after he was charged with insider trading based on tips he allegedly received from a former Food and Drug Administration official.
Sanjay Valvani, reportedly a partner at Visium Asset Management, was found Monday in his home in Brooklyn, said New York City police Detective Ahmed Nasser. Valvani's death is being investigated, but it appears to be a suicide, he said.
An attempt to reach Valvani's lawyer, Barry Berke with Kramer Levin Naftalis & Frankel, for comment was not immediately successful Tuesday morning. But in a statement last week, Berke called his client “an innocent man whose investment decisions were always based on rigorous and entirely appropriate research and analysis, consistent with his high integrity.”
Valvani's death follows news last week that Gordon Johnston—a former deputy director of the FDA's Office of Generic Drugs and former vice president of the Generic Pharmaceutical Association—pleaded guilty to tipping off Valvani about drug developments that allowed the trader to illegally make $25 million in profits from insider trading.
The Securities and Exchange Commission alleges, among other things, that Johnston breached his duties to the Generic Pharmaceutical Association, where he was the association's designated representative to the FDA. In that position, he wasn't supposed to reveal information he learned in relation to the association or its members, according to the SEC. Johnston hid his role as a hedge fund consultant from a former FDA colleague to get confidential information, which he then allegedly shared with Valvani.
The two, and several others, faced criminal charges filed by the U.S. attorney in New York City last week. The SEC also filed civil complaints in federal court last week against Johnston, Valvani and several others.
Johnston's attorney Christopher Mead declined to comment on the allegations Tuesday but said he was sad to hear of Valvani's death and is thinking about his family.
According to the U.S. attorney's office, Johnston learned from a former colleague at the FDA that the agency would approve a drug called enoxaparin, a generic version of Sanofi's brand-name drug Lovenox, meant to prevent and treat deep-vein thrombosis and treat acute coronary syndromes. Johnston then told Valvani about the pending approvals.
Johnston also gave Valvani information in advance of several other FDA announcements, according to the SEC complaint.
Two days after the charges were released, the Wall Street Journal reported that Valvani's hedge fund firm, Visium Asset Management, planned to liquidate its flagship fund and sell to another competitor.
“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,” founder Visium founder Jacob Gottlieb wrote in a letter to investors obtained by the Wall Street Journal.
