Indian-origin hedge fund manager Sanjay Valvani commits suicide

A 44—year old Indian-origin hedge fund portfolio manager, who was charged last week with insider trading, has committed suicide in his apartment here.

Sanjay Valvani had faced securities fraud and wire fraud charges after he had used confidential information obtained from a former official at the Food and Drug Administration to trade in the securities of two pharmaceutical companies and earned about $25 million in trading profits.

A New York Police Department spokesperson confirmed to PTI that Valvani had committed suicide. The spokesperson said Valvani left “a note” and had a “slash wound” to his neck and wrist. A knife was found by the body.

The police had got a 911 call from Valvani’s wife at about 6 p.m. on Monday and he was pronounced dead by medical personal at 6:30 p.m. The police spokesperson said Valvani’s body was on the floor of the bedroom in his Brooklyn home and by the time the medical team reached the scene he was dead.

Valvani’s attorneys Barry Berke and Eric Tirschwell termed his death a “horrible tragedy that is difficult to comprehend.” They said he was a “loving father, husband, son and brother and committed friend, colleague and mentor.”

“We hope for the sake of his family and his memory that it will not be forgotten that the charges against him were only unproven accusations and he had always maintained his innocence,” they said in a statement.

U.S. Attorney Preet Bharara’s office, which had brought the charges on June 15, declined to comment on the development. Former portfolio manager Stefan Lumiere was also charged along with Valvani in Manhattan federal court.

A political intelligence consultant and former senior official at the Food and Drug Administration Gordon Johnston and former hedge fund portfolio manager Christopher Plaford had pled guilty and were cooperating with the government.

The charges had alleged that between 2005 through January 2011, Valvani unlawfully obtained from Mr. Johnston highly confidential and material non-public information with the FDA about the agency’s approval of pending generic drug applications.

Valvani was also charged with passing certain highly confidential and material non-public information to Mr. Plaford, who also executed trades based on the information.

Valvani was the



latest Indian-origin hedge fund manager to be charged with insider trading.

Previously, Mr. Bharara had brought insider trading charges against former Goldman Sachs Director Rajat Gupta and former hedge fund founder Raj Rajaratnam in one of the most high-profile insider trading cases in U.S. history.

Gupta was convicted in 2012 of passing confidential boardroom information about Goldman to Rajaratnam and spent two years in prison. Rajaratnam is still serving his 11-year prison term in a Massachusetts jail.

As part of the scheme, at Valvani’s direction, Johnston had obtained highly confidential and material non-public information from a senior FDA official about the status and approval of a generic drug called enoxaparin and passed to Valvani.

He used this information to trade in the securities of two pharmaceutical companies likely to be affected by an approval of a generic enoxaparin application, earning approximately $25 million in trading profits when the FDA announced its first such approval.

In January 2010, after receiving a tip from Johnston, Valvani told his healthcare-focused hedge fund that Johnston should be given a raise.

In an e-mail to the chief financial officer of the hedge fund, Valvani sought to justify providing a raise to Johnston by stressing how important he was to him, “[Johnston] is without question the most valuable consultant I’ve ever worked with and I’m pushing to reinforce the value of the relationship and encourage him to continue to go above and beyond for our team.”

Valvani surrendered to authorities on Tuesday morning.

In separate actions, the Securities and Exchange Commission filed civil charges against Valvani, Lumiere, Johnston and Plaford.

“As alleged, Valvani, Johnston, and Plaford conspired to extract highly confidential and tightly guarded information about pending applications for generic drug approvals from the FDA, and traded on such information, reaping millions of dollars in illegal profits,” Mr. Bharara had said in announcing the charges last week.

The charges had further alleged that beginning in or about 2005, Valvani directed Johnston to gather confidential and material non-public information from FDA employees about the FDA’s consideration of the enoxaparin Abbreviated New Drug Application.