A former trader at Visium Asset Management LP told an ex-colleague that one of his first stops after leaving the firm was the SEC. What he didn’t say was that he had turned on his former co-workers and was secretly recording their conversations for the FBI.
The trader, Jason Thorell, has spent almost three years helping the government with its investigation of Visium, an $8 billion investment firm now winding down after the U.S. brought charges against three executives, according to three people familiar with the matter. A judge has granted him immunity for his testimony, and he may even get a payout as a whistle-blower, according to an FBI affidavit.
Thorell didn’t return messages left on his cell phone or with his family. His identity is masked in court papers including the FBI affidavit, all of which refer to him only as “CW-1.” But the three people familiar with the case said the trader is Thorell. His identity has not been previously revealed.
In many ways, Thorell, now 38, fits the mold of a whistle-blower -- many of whom are disgruntled former workers eager for reward and perhaps vindication because of the alleged misdeeds of an ex-employer. He is part of a wave of informants who have come forward to participate in the Securities and Exchange Commission’s beefed-up whistle-blower program, which has awarded $85 million to 32 individuals.
Thorell’s approach to the government triggered an investigation into how Visium valued holdings in its credit portfolio, a probe that expanded into charges that executives were trading on inside tips about pending regulatory decisions about certain drugs. He is one of at least four people cooperating with a continuing U.S. investigation.
Price Quotes
Thorell, who was a junior trader before he left Visium, was an active participant in an alleged scheme to inflate the value of securities carried on the firm’s trading book, according to court filings. A broker who supplied Visium with price quotes for the securities, David “Scott” Vandersnow, is also aiding the government after providing evidence, according to the people, who asked not to be identified speaking about confidential details of the investigation. Vandersnow is identified in court papers only as “Broker-1.”
Vandersnow said he was “not involved in it” when contacted on his phone, and then didn’t return other messages.
A portfolio manager, Christopher Plaford, who ran credit investments, is cooperating after pleading guilty to mis-marking bonds using sham quotes from brokers, and trading on inside tips, according to prosecutors and court records. Prosecutors have charged an assistant portfolio manager, Stefan Lumiere, whose sister was married to firm founder Jacob Gottlieb, with mis-pricing assets. He has denied wrongdoing.
U.S. prosecutors on June 15 charged Sanjay Valvani, a star money manager who ran part of Visium’s flagship health-care fund, with trading on secret tips from a former Food and Drug Administration official, going back as early as 2005. Valvani was found dead in his Brooklyn home days later in what authorities said was a suicide. The FDA official, Gordon Johnston, pleaded guilty to leaking information to Visium in exchange for payments of several hundred thousand dollars. He is cooperating with the government.