U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19084 / February 16, 2005
SECURITIES AND EXCHANGE COMMISSION v. NORTHSHORE ASSET MANAGEMENT, ET AL., Civil Action No. 05-Civ.-2192 (RO) (S.D.N.Y.)
SEC BRINGS EMERGENCY ACTION AGAINST NORTHSHORE ASSET MANAGEMENT, LLC, ARDENT RESEARCH PARTNERS, L.P., ARDENT RESEARCH PARTNERS, LTD., SALDUTTI CAPITAL MANAGEMENT, L.P., KEVIN KELLEY, ROBERT WILDEMAN, AND GLENN SHERMAN
The Securities and Exchange Commission announced today that it filed an emergency enforcement action to halt fraudulent conduct concerning two hedge funds, Ardent Research Partners, L.P. ("Ardent Domestic") and Ardent Research Partners, Ltd. ("Ardent Offshore") (collectively, "the Ardent Funds"), against Northshore Asset Management, LLC ("Northshore"), Ardent Domestic, Ardent Offshore, Saldutti Capital Management, L.P. ("SCM"), Kevin Kelley ("Kelley"), Robert Wildeman ("Wildeman"), and Glenn Sherman ("Sherman") (collectively, the "Defendants").
The Complaint alleges that from April 2003 to the present, Northshore and its principals have diverted approximately $37 million of the Ardent Funds' assets to their control and invested them in illiquid securities of, and made loans to, entities in which Northshore and its principals have an interest. The Commission alleges that the Defendants did not disclose to the Ardent Funds' investors that Northshore had purchased SCM and that Northshore was managing a significant portion of the Ardent Funds' assets. Additionally, the Defendants made numerous misrepresentations concerning (i) the nature of the investments, (ii) the liquidity of the investments, and (iii) the use of investor funds for undisclosed loans. For the last several months, the Defendants have refused to honor valid redemption requests from Ardent Domestic investors.
The complaint charges all the Defendants with violating Section 17 (a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 thereunder. The complaint further charges Northshore and SCM, aided and abetted by Kelley, Wildeman, and Sherman, with violating Sections 206(1) and 206(2) of the Investment Advisers Act.
In its emergency enforcement action, the Commission is seeking, among other emergency relief, a temporary restraining order (i) freezing the Defendants assets; and (ii) appointing a temporary receiver over Northshore, SCM, Ardent Domestic, and Ardent Offshore. In addition to this emergency relief, the Commission also seeks orders enjoining the Defendants, preliminarily and permanently, from committing future violations of the foregoing federal securities laws, and a final judgment ordering the Defendants to disgorge ill-gotten gains, and assessing civil penalties.
The Commission expresses its appreciation to the United States Attorney's Office for the Southern District of New York for their assistance in the investigation of this matter. [Securities and Exchange Commission v. Northshore Asset Management, LLC, Ardent Research Partners, L.P., Ardent Research Partners, Ltd., Saldutti Capital Management, L.P., Kevin Kelley, Robert Wildeman, and Glenn Sherman, Civil Action No. 05 Civ. 2192 ( RO ) (S.D.N.Y., filed February 16, 2005)] (L.R. 19084)