Latest / Bloomberg Intelligence / Bloomberg's Porzecanski on Visium, Kapur on the RNC (Audio)

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Bloomberg's Porzecanski on Visium, Kapur on the RNC (Audio) · Bloomberg Intelligence

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  Speaker 1: at Kathleen Hayes on Bloomberg Radio, eight billion dollars a
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  Speaker 1: hedge fund, lawyers, courts not guilty. Please, Yes, this is
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  Speaker 1: the story of Visium, and here to tell it is
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  Speaker 1: Cotcha Porican Scheme, hedge fund reporter for Bloomberg News, and
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  Speaker 1: Concha joins me in the studio of Concha. For people
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  Speaker 1: that have not been following the saga of Visium asset management,
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  Speaker 1: why don't you just start off by telling us about
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  Speaker 1: this eight billion dollars at one point eight billion dollar
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  Speaker 1: hedge fund and what has gone so spectacularly wrong. Thanks
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  Speaker 1: very much for having me um well in the hedge
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  Speaker 1: fund community, at least in this this summer. This has
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  Speaker 1: been kind of one of the biggest scandals of the
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  Speaker 1: summer because I mean it involves a lot of drama.
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  Speaker 1: They in March they told investors that they were being
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  Speaker 1: investigated for two different things um and later on it
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  Speaker 1: was revealed kind of the specifics of what they were
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  Speaker 1: being investigated for. When one employee, a very high ranking
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  Speaker 1: employee UH at Visium, one of the star money managers.
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  Speaker 1: He managed one of the biggest books at museum UH
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  Speaker 1: he was indicted for insider trading, and two other former
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  Speaker 1: employees who worked on the credit portfolio, UH, where one
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  Speaker 1: was indicted in well, now both of them have been
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  Speaker 1: indicted for UH, one for for insider trading and miss
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  Speaker 1: marking the bonds in the fund and the other one
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  Speaker 1: for just for miss marking the bonds and the fund
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  Speaker 1: which inflates the value of the portfolio. And then shortly
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  Speaker 1: after the charges were UM were made public, UH, the
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  Speaker 1: VISIOM announced it's it was closing four of its hedge funds.
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  Speaker 1: Basically it was all but shutting shutting down, and and
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  Speaker 1: then a couple of days later, uh, Sanjay Valvani committed suicide.
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  Speaker 1: So it has been a very dramatic unfolding of events UM.
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  Speaker 1: And just in kind of reporting that out, UH, you know,
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  Speaker 1: talking to lots and lots of people who were either
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  Speaker 1: invested in the funds over time or worked there. UH,
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  Speaker 1: it appeared that there were several kind of red flags
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  Speaker 1: that we thought merited some reporting on UM. This is
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  Speaker 1: a fund that was started in two thousand and five
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  Speaker 1: by Jacob by Jacob gottlieb And and several of his
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  Speaker 1: former colleagues from bally Asney. They managed a healthcare portfolio
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  Speaker 1: at Ballyasney. They spun that out, they formed Physium and
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  Speaker 1: at first it was just supposed to be it was
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  Speaker 1: just a healthcare fund, and then he had aspirations to
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  Speaker 1: grow that UM much bigger, and he created this multi
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  Speaker 1: manager platform, multi strategy fund UH called Physium Global, which
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  Speaker 1: and that that fund is being bought by or at
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  Speaker 1: least there and talks to buy be bought by a
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  Speaker 1: Liance Bernstein, so that one will survive UM, but the
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  Speaker 1: the other ones have all been are all being liquidated. UH.
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  Speaker 1: And and yeah, it grew very large, very quickly, and
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  Speaker 1: it's you know, there's questions, is too, did you know
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  Speaker 1: did they keep up with the growth? Were they behaving
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  Speaker 1: UM as they should have been when they were an
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  Speaker 1: eight billion dollar fund? I mean, it's one thing when
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  Speaker 1: you're a small shop and it's a couple of guys.
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  Speaker 1: Matt Levin had a had a piece today that talked
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  Speaker 1: kind of like, how should you be behaving when you're
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  Speaker 1: a really big fund versus a really small fund. And
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  Speaker 1: if it's a couple of guys in a room and
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  Speaker 1: you're all sitting around a desk and you're you know,
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  Speaker 1: you know what's going on because it's right in front
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  Speaker 1: of you, that's one thing. But it's another thing when
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  Speaker 1: you balloon to be such a big, big fund and
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  Speaker 1: they I mean Jake had his brother as chief compliance.
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  Speaker 1: Jacob Gottlieb had his brother as chief chief compliance officer
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  Speaker 1: until two thousand and nine, and they had grown. That
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  Speaker 1: is considered a conflict of interest. Certainly raises eyebrows. You know,
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  Speaker 1: if you have to have this person sign off on
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  Speaker 1: everything and he's your brother. Again, it's one thing if
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  Speaker 1: everybody's just sitting around a table. It's another thing if
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  Speaker 1: you're trying to show that you're really established organization to
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  Speaker 1: be taken seriously. Um, we're more family members involved in Visium. Sure.
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  Speaker 1: One of the one of the people who has been charged, M.
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  Speaker 1: Stefan Lumier is Jacob Gottlieb's um brother in law. Well,
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  Speaker 1: he's the brother of Um Gottlieb's strange wife. They're going
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  Speaker 1: through divorce proceedings and and Jacob Gottlieb's father was and
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  Speaker 1: Mark's father was even had like an office on on
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  Speaker 1: the premises the first few years. Uh, he's an accountant.
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  Speaker 1: And I mean there's nothing sketchy implied here, but just
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  Speaker 1: basically he was there too. It's kind of it started
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  Speaker 1: as this kind of family shop and grew. And the
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  Speaker 1: question is did they you know, did they really grow
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  Speaker 1: in their regulatory aspect as they should have been um
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  Speaker 1: so that they have the right controls in place in
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  Speaker 1: order to manage this scale of operations. Sure, sure, and
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  Speaker 1: certainly with this miss marking scheme. UM. You know, there's
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  Speaker 1: a question there is so you know, do they really
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  Speaker 1: know what they were doing when it came to valuing
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  Speaker 1: bonds um when you know, in the back office or
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  Speaker 1: wherever uh this is, you know, they they overrode um
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  Speaker 1: prices two hundred and eighty four times in their favor,
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  Speaker 1: which is a lot. Uh. So there's a lot of
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  Speaker 1: red flags and and even in the SEC you know,
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  Speaker 1: buried into in the SEC filing they say, uh, you know,
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  Speaker 1: and that the procedures of the institution failed to prevent
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  Speaker 1: a lot of this wrongdoing. A feeling. This is a
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  Speaker 1: continuing story and we will look to you to cover
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  Speaker 1: it for us. Thank you very much, Kacha Porzakanski, head
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  Speaker 1: fund hedge fund reporter for a Bloomberg News speaking about
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  Speaker 1: Visium asset management. Thank you. All right, Now let's turn
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  Speaker 1: our attention to Cleveland and the Republican National Convention. Sahil
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  Speaker 1: kap Poor White House correspondent for Bloomberg News, is there
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  Speaker 1: and can tell us about what's going on. Soa hello,
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  Speaker 1: thanks very much for being with us. So why if
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  Speaker 1: you could tell us what the reaction was, if any,
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  Speaker 1: to the latest news having to do with a speech writer.
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  Speaker 1: A writer who worked for the Trump works for the
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  Speaker 1: Trump organization named Meredith mc ivor, and she submitted her
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  Speaker 1: resignation that was not accepted by the Trump organization for
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  Speaker 1: the lifted passages for Milannia Trump's speech the other night. Right, So,
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  Speaker 1: this employee of the Trump organization, Meredith McIvor, submitted her resignation.
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  Speaker 1: She took responsibility essentially for the lifted passage, the lifted
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  Speaker 1: passages in Milannia Trump speech that bore a lot of
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  Speaker 1: resemblance to the two thousand and eight speech that Michelle
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  Speaker 1: Obama gave in a similar context, and as you pointed out,
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  Speaker 1: the Trump campaign did not accept they um, so, you know,
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  Speaker 1: I think what the Trump campaign was doing was at
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  Speaker 1: least assigning responsibility for the error that happened. They've gotten
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  Speaker 1: a lot of criticism about this over the last day
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  Speaker 1: and a half since it happened. It seem to be
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  Speaker 1: a pretty clear cut case of plagiarism, given that their
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  Speaker 1: extensive passages from Michelle Obama's speech that we're um, you
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  Speaker 1: know that we're using Monnia speech. So this is their
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  Speaker 1: attempt to do damage control. At the same time, on
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  Speaker 1: a on a purely political level, it's it's unlikely that
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  Speaker 1: this is going to turn voters away from Donald Trump.
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  Speaker 1: What the campaign is trying to do is and that
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  Speaker 1: the element of distraction, and it's pretty new. We don't
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  Speaker 1: know exactly how it's going to play, um, you know,
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  Speaker 1: so we'll see how it pans out. Paul Manaford, who
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  Speaker 1: is Trump's campaign chairman, said that the billionaire who said
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  Speaker 1: that Trump has changed the face of the Republican Party
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  Speaker 1: and promised an all Trump convention, is that really taking place?
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  Speaker 1: Yesterday Trump officially won the Republican nomination, and it's a
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  Speaker 1: it's a very significant moment for the Republican Party. It
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  Speaker 1: marks the fact that the nativist, nationalist wing of the
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  Speaker 1: party has essentially taken control from from the you know,
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  Speaker 1: the traditional limited government wing of the party and to
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  Speaker 1: that to that extent, it is Trump's party. Now. Trump
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  Speaker 1: represents this nationalist natives faction. That's always been there, but
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  Speaker 1: has not been in control at the at the upper
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  Speaker 1: echelons of the party not had a nominique quite like this,
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  Speaker 1: So you know, to that extent it is Trump's party.
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  Speaker 1: And and also notable there are six people at this
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  Speaker 1: convention altogether, all four days of it named Trump, So
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  Speaker 1: you know it's it's it's Trump's convention in more ways
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  Speaker 1: than one. How speaker Paul Ryan, what was the reaction
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  Speaker 1: to his speech because he has been a reluctant supporter
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  Speaker 1: of Donald Trump. Right, Paul Ryan ran through the reasons
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  Speaker 1: that you know, traditional Republicans, movement conservatives, and and most
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  Speaker 1: elected officials in the party um are Republicans. He spoke
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  Speaker 1: of limited government, He spoke of an inclusive, welcoming party
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  Speaker 1: that you know that you know where where anyone that
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  Speaker 1: wants anyone to succeed, regardless of race, gender, and so forth.
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  Speaker 1: It's a little different from Trump's message, right, because Trump
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  Speaker 1: is not playing to those traditional sentiments. He's making some
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  Speaker 1: some fairly overt racial appeals, and he's been criticized as
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  Speaker 1: a is a very divisive figure. And unlike Paul Ryan,
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  Speaker 1: who is who represents a part of the segment of
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  Speaker 1: the party that is pro immigration, that is pro trade,
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  Speaker 1: um that that wants to cut entile and programs like
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  Speaker 1: security and medicare. Trump is the exact opposite on all
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  Speaker 1: those fronds. Trump is an anti immigration, he's anti trade,
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  Speaker 1: and he likes these social programs. So there's a lot
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  Speaker 1: of tension there and I think, um, you know it,
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  Speaker 1: it sort of seeped through in an element of discomfort
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  Speaker 1: that people saw in Paul Ryan's speech. Just quickly saw Hill,
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  Speaker 1: what should we look for in tonight's Republican National Convention.
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  Speaker 1: Keep an eye on Mike Pence. This is the vice
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  Speaker 1: presidential nominee introducing himself to the country. He's not very
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  Speaker 1: well known. He's going to try to communicate with segments
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  Speaker 1: of the Republican based movement, conservatives and evangelicals who have
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  Speaker 1: been skeptical of Trump. Thank you very much, saw Hill.
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  Speaker 1: Ka Poor white House, correspondent for Bloomberg News, reporting from Cleveland,
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  Speaker 1: site of the Republican National Convention, which continues today and tomorrow.
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  Speaker 1: You're listening to taking Stock. I'm Pim Fox and this
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  Speaker 1: is Bloomberg