VISIUM HEDGE FUND MANAGERS CHARGED WITH INSIDER TRADING Federal authorities filed criminal and civil securities charges against three current and former traders at Visium Asset Management, a multibillion-dollar hedge fund focused on health care, Alexandra Stevenson reports in DealBook. Prosecutors said that the fund had an inside view of the drug approval process at the Food and Drug Administration that gave it trading windfalls of $32 million.
Gordon Johnston, a former deputy director of the office of generic drugs who became a consultant, is accused of leveraging his F.D.A. contacts and abusing his role at the Generic Drug Trade Association, to glean information on behalf of Sanjay Valvani, one of Visium’s top portfolio managers. The authorities said Mr. Johnston arranged speaking panels and teleconferences between F.D.A. officials and generic drug manufacturers to discuss issues that directly concerned his hedge fund client.
Mr. Valvani was able to reap nearly $32 million in illicit gains based on information about coming approvals for a generic version of a drug that helps prevent blood clots, according to court filings. Prosecutors also accused Mr. Valvani of passing on the tips to Christopher Plaford, a former colleague.
Mr. Plaford has pleaded guilty to trading on illegal tips. Mr. Johnston has also pleaded guilty and they are both cooperating with the government.
Mr. Valvani’s lawyer, Barry H. Berke, said his client was innocent. “The prosecution of Mr. Valvani is yet another example of this United States attorney’s office stretching the facts and law to try to transform entirely innocent trading decisions into a crime,” he said.
The networks used by hedge funds to get an investing edge were the focus of a crackdown by Preet Bharara, the United States attorney in Manhattan, that resulted in the convictions of more than 80 traders, consultants and analysts.
Although Mr. Bharara’s office was dealt a blow when a federal appellate court overturned two prominent convictions from 2014, it has gained momentum again in the last month.
TENCENT NEARS DEAL TO BUY MAKER OF CLASH OF CLANS Tencent is near a deal to buy Supercell, the Finnish game company that makes Clash of Clans, Michael J. de la Merced and Nick Wingfield report in DealBook.
A person briefed on the matter said the transaction would value the company at more than $9 billion.
Tencent, with a market value of about $211 billion, controls the messaging service WeChat as well as a number of online games hosted on its QQ portal. A deal for Supercell would be the biggest takeover by any of China’s so-called BAT trio of Baidu, Alibaba and Tencent, according to data from Standard & Poor’s Global Market Intelligence.
Supercell has produced a string of hits like Clash of Clans, Hay Day and Clash Royale. It reported revenue of $2.33 billion for 2015, up from $1.78 billion the previous year. Its earnings before interest, tax, depreciation and amortization also rose to $964 million, from $592 million. Tencent is already China’s dominant online game company, accounting for about 32 percent of revenue from China’s online game market in 2015, according to the research firm Niko Partners.
Under the terms of the proposed deal, Tencent would buy the roughly 73 percent stake in Supercell that is held by SoftBank, the Japanese telecommunications provider, said a person briefed on the discussions. Supercell’s founders would remain at the company.
The Wall Street Journal, which earlier reported the discussions, said that Tencent was also in discussions with financial investors, like Hillhouse Capital Group of Beijing, to join the deal as co-investors.
ON THE AGENDA Oracle will hold a call on its latest earnings at 5 p.m.
INVESTORS BYPASS PRIVATE EQUITY Sovereign wealth funds, pension funds and even private families have been flexing their deal-making muscles and taking stakes in companies themselves, Leslie Picker reports in DealBook.
These so-called emerging buyers are looking for investment gains without paying management fees to private equity firms. Over the last year and a half, they bought about 17 percent of the assets sold by private equity firms, up from 2 percent in 2007, according to Goldman Sachs data. They were even more active as buyers than private equity firms themselves.
They are investing in every sector around the world. Saudi Arabia’s main investment fund took a $3.5 billion stake in Uber this month. JAB Holding Company, the investment arm of the Reimann family in Germany, led the acquisition of Keurig Green Mountain for about $14 billion in March.
The risks, however, are higher for these newcomers because they do not have the same people to find and vet deals that a private equity firm or a bank would have. But banks are stepping in – Goldman Sachs plans to expand its financial sponsors group to focus more on emerging buyers.
Emerging buyers are also taking steps to make their internal deal-making departments more professional. Three years ago, Abu Dhabi’s sovereign fund created its own group, which now has 15 people, to focus on direct investments.
Emerging buyers are also making deals in conjunction with private equity firms, a practice known as co-investing. This gives private equity firms access to a larger pool of capital to make bigger acquisitions, while it allows investors, whom they call limited partners, to pay few or no fees. Of 140 limited partners surveyed last year by PricewaterhouseCoopers, 73 percent said they had co-invested in at least one deal.
Contact amie.tsang@nytimes.com
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