The Brooklyn-born manager told Institutional Investor four years ago that he was committed to running a "very high quality, high integrity firm" that would compete with large multi-strategy hedge funds, a step beyond the health-care fund that was Visium’s first offering. Clients bought into the expansion, and assets ballooned from $4 billion in 2013 to $8 billion this year.

Family Affair

Initially, Visium was more of a family affair, with Gottlieb’s relatives pitching in. His father, an accountant, had an office at the firm’s New York headquarters until 2010 and occasionally helped on financial matters in an unofficial capacity, according to people with knowledge of the arrangement who asked not to be identified without authorization to discuss the firm’s internal affairs.

Lumiere was hired in 2007, two years after his sister Alexandra became engaged to Gottlieb.

As recently as 2009, Gottlieb’s brother Mark was the head of compliance. His title appears as chief compliance officer in filings made to the Securities and Exchange Commission in every year between 2006 and 2009. He previously spent about two years as an analyst at UBS Group AG and a similar tenure at Balyasny Asset Management, where he worked with his brother. In between, he briefly held roles in business development at two tech start-ups. Mark Gottlieb remains a Visium partner and its chief administrative officer.

“Putting a relative in that role creates a potential conflict of interest and makes it more difficult for that person to be objective,” Brad Balter, head of Balter Capital Management, which invests clients’ money in hedge funds, said of the compliance post. “It’s indicative of a cultural problem.” Balter hasn’t invested with Visium.

Compliance Measures

Mark Gottlieb, who hasn’t been accused of any wrongdoing, declined to comment through Gasthalter.

In its complaint against Plaford, the SEC said Visium’s policies and procedures failed to prevent his misuse of material non-public information. At least between 2011 and 2013, the company had no measures to monitor employees’ communications with outside consultants and put the onus on employees to alert the legal department or compliance chief if they may had come into possession of inside information, the SEC said.  The SEC also said in its complaint against Valvani that no one at Visium monitored his relationship with the consultant or “at a minimum, questioned the lawful nature of the information” he obtained.

Compliance departments have bulked up in recent years as a wave of scandals forced hedge funds to look harder for misbehavior by traders. Point72 Asset Management in 2014 hired former federal prosecutor Vincent Tortorella as chief compliance and surveillance officer. He created a new surveillance unit. The firm is the successor to Cohen’s hedge fund, SAC Capital Advisors, which pleaded guilty to securities fraud.