Stefan Lumiere, a former portfolio manager at Visium Asset Management, was convicted on all counts in Manhattan federal court after a six-day jury trial. He faces prison for orchestrating a years-long scheme to mismark securities and inflate the net asset value of a healthcare-focused hedge fund, deceiving investors with fake broker quotes and phony price data.
Lumiere was found guilty of conspiracy to commit securities and wire fraud, securities fraud, and wire fraud. The crimes occurred between June 2011 and September 2013, during which Lumiere and co-conspirators manipulated the valuation of illiquid healthcare debt instruments in the firm’s Credit Fund. The fraud routinely overstated the fund’s monthly NAV by tens of millions of dollars, directly impacting investor payouts and performance fees.
According to U.S. Attorney Preet Bharara, Lumiere’s method was brazen: when official pricing didn’t suit his goals, he dictated false prices to so-called ‘friendly’ brokers who then sent back fabricated quotes via Bloomberg email. These sham submissions gave the illusion of independent verification, bypassing internal controls and fooling the fund’s administrator. The quotes were then used to override legitimate valuations.
Visium Asset Management, which ran the Credit Fund from 2009 until 2013, specialized in healthcare investments. The fund’s performance fees were tied to annual profits—making inflated valuations a direct path to higher personal compensation for Lumiere and others. The scheme not only violated Visium’s own policies but directly contradicted disclosures made to investors about valuation integrity.
U.S. District Judge Jed S. Rakoff presided over the trial, which ended in a swift verdict. Prosecutors emphasized that while the securities involved were complex, the crime itself was simple: lie, fabricate numbers, and profit. The jury took less than a day to return a guilty verdict on all counts.
Lumiere now awaits sentencing, facing significant prison time and financial penalties. The case is part of a broader federal crackdown on financial fraud in the hedge fund industry, sending a clear message: paper gains built on lies will be punished as harshly as any street crime.
Related Federal Cases
Key Facts
- State: New York
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes
- Source: Official Source ↗
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