Sanjay Valvani, a hedge fund manager at Visium Asset Management LP who was charged last week with insider trading, has been found dead in an apparent suicide, the police said Tuesday.
Valvani, 44, was discovered by his wife on Monday evening at his Brooklyn home with a wound to his neck, a New York Police Department spokeswoman said. A suicide note and a knife were recovered, she added.
The death marks a stunning turn in one of the U.S. government's biggest insider trading cases. Valvani's lawyers, Barry Berke and Eric Tirschwell, called his death a "horrible tragedy that is difficult to comprehend."
"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 added.
A spokesman for Manhattan U.S. Attorney Preet Bharara, whose office brought the case, declined to comment.
Valvani was arrested last Wednesday and charged with fraudulently making US$25 million by getting advanced information about U.S. Food and Drug Administration approvals of generic drug applications.
Prosecutors said the inside information was provided by Gordon Johnston, a consultant and former employee at the FDA, who got tips from a friend, who still works at the agency.
Valvani passed some of the tips to Christopher Plaford, then a Visium portfolio manager, who made his own illegal trades, prosecutors said.
Both Johnston and Plaford secretly pleaded guilty earlier this month and agreed to cooperate in the case against Valvani.
He pleaded not guilty to charges including securities fraud, wire fraud and conspiracy and had been freed on US$5 million bond.
Valvani had been a partner at Visium Asset Management and was instrumental in building it with founder Jacob Gottlieb into an US$8-billion firm that counted some of the country's biggest pension funds as clients.
Last Friday, Gottlieb told investors that it was impossible to continue managing the firm because of the negative impact from the publicity surrounding Valvani's arrest and substantial investor withdrawals.
Gottlieb wrote to clients that one of the firm's portfolios is being sold to AllianceBernstein and that the Balanced Fund, where Valvani worked, was being shut down.
"We mourn the tragic loss of Sanjay, a devoted father, husband and friend. Our thoughts are with his family during this difficult time," Gottlieb said in a statement on Tuesday.