NEW YORK (Reuters) - The investment firm that runs the Sequoia Fund, long known for its ties to Warren Buffett, was sued by shareholders who claim it recklessly took a huge stake in embattled drug company Valeant Pharmaceuticals International Inc (>> Valeant Pharmaceuticals Intl Inc), causing more than $2 billion in losses.

Investment firm Ruane, Cunniff & Goldfarb; portfolio managers Robert Goldfarb and David Poppe; and two directors were accused of gross negligence for letting Sequoia amass a Valeant stake that peaked at 32 percent of its portfolio in August.

According to the complaint filed on Friday in a New York state court in Manhattan, this violated Sequoia's policy of not investing more than 25 percent of assets in one industry.

The complaint also called it the "antithesis" of Sequoia's strategy of seeking investments such as Buffett's Berkshire Hathaway Inc (>> Berkshire Hathaway Inc.), its second-largest holding, that represent "value-oriented" investing.

Valeant shares have lost about two-thirds of their value since early August amid concerns about its drug pricing, merger appetite and since-severed ties to a mail-order pharmacy.

Sequoia's investment "is akin to a gambler at the race track betting more than one quarter of his net worth on a fast horse with a history of maladies and with improbably high odds," the complaint said.

"Just as it should come as no surprise to the gambler when the horse pulls up lame, the same holds equally true for the defendants," it added.

Other defendants include the author Roger Lowenstein, who chairs Sequoia's board, and director Robert Swiggett. The lawsuit seeks to recoup damages and management fees for the fund.

Ruane, Cunniff and lawyers for the defendants did not immediately respond to requests for comment.

Two other independent directors, including Buffett bridge partner Sharon Osberg, quit Sequoia's board last October.

The lawsuit cites news reports that those directors objected to the Valeant stake, and recounts criticism of Valeant by Charles Munger, Berkshire's vice chairman.

Ruane, Cunniff's late founder, William Ruane, was a friend of Buffett, who, like Sequoia, is known for concentrated bets.

The $6.3 billion Sequoia fund has returned an average 7.23 percent annually over 15 years, in the top percentile among peers, according to mutual fund information provider Morningstar Inc.

But in 2015, the Valeant stake led to an overall 7.29 percent loss, trailing 97 percent of peers.

In an Oct. 28 shareholder letter, Goldfarb and Poppe defended Valeant, saying the company "is an aggressively-managed business that may push boundaries, but operates within the law."

The case is Epstein et al v. Ruane, Cunniff & Goldfarb Inc et al, New York State Supreme Court, New York County, No. 650100/2016.

(Reporting by Jonathan Stempel in New York)

By Jonathan Stempel