AllianceBernstein to Buy Visium Asset Management Fund

A hedge-fund firm at the center of a new insider trading case has reached a deal to sell one of its funds to money manager AllianceBernstein LP, according to people familiar with the matter.

The firm, Visium Asset Management LP, agreed to sell its Visium Global Fund and transfer that fund's management staff, these people said. The deal doesn't include Visium's flagship Balanced Fund, these people said.

U.S. prosecutors alleged earlier this week that a current and a former Visium portfolio manager traded on confidential government information about generic-drug approvals. They allegedly received the tips from a former Food and Drug Administration official. One of the managers pleaded not guilty while the other pleaded guilty to securities and wire-fraud charges.

Visium founder Jacob Gottlieb, a physician by training, is unlikely to join AllianceBernstein as part of the deal, the people said.

The agreement could be announced as soon as Friday, the people said, though it could still fall apart.

The terms of the deal aren't known. The price is partially contingent on the total sum of assets that are transferred to AllianceBernstein, the people said.

Visium has received a wave of redemption requests following a period of underperformance and the investigation into alleged insider trading by current and former employees. Its main fund is down 9% this year through mid-June, according to an investor update reviewed by The Wall Street Journal.

The fund AllianceBernstein agreed to buy was down 2.51% through mid-June, according to the investor update.

AllianceBernstein views the transaction as a way to add investment staff and hedge-fund muscle to its alternative investment business, people familiar with the matter said.

The New York money manager currently manages about $20 billion in alternative investments, including private credit and hedge-funds, real estate, and so-called "liquid-alternatives" that package hedge-fund like strategies in mutual funds. It has done several small deals in recent years to build that portion of its business.

Write to Sarah Krouse at [e-mail] and Rob Copeland at [e-mail]

(END) Dow Jones Newswires

June 17, 2016 12:05 ET (16:05 GMT)

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