Litigation Release No. 19733 / June 21, 2006

SEC v. Northshore Asset Management, et al., Civil Action No. CV 05-2192(RO) (S.D.N.Y.)

Judge Grants Commission and Receiver's Joint Motion to Hold Defendants Glenn A. Sherman and Robert J. Wildeman in Contempt

The Securities and Exchange Commission announced today that in SEC v. Northshore Asset Management, et al., CV 05-2192 (RO) (S.D.N.Y.), Judge Richard Owen granted the Commission and the Court-appointed receiver's joint motion to hold two defendants, Glenn A. Sherman ("Sherman") and Robert J. Wildeman ("Wildeman"), in contempt of court.

On February 16, 2005, the Commission filed SEC v. Northshore, alleging that, in April 2003, defendant Northshore Asset Management LLC ("Northshore") and its three largest shareholders, defendants Kevin Kelley ("Kelley"), Sherman, and Wildeman, obtained control over the defendants Saldutti Capital Management, L.P. ("SCM") and two hedge funds, defendants Ardent Research Partners L.P. and Ardent Research Partners Ltd. (together, the "Ardent Funds") and fraudulently proceeded to divert tens of millions of dollars of the Ardent Funds' cash assets to Kelley, Sherman, and Wildeman's own personal use (including purported personal loans and self-dealing investments). Consequently, the Ardent Funds became illiquid and were unable to meet investor redemption requests. In October, 2005, the Commission filed a First Amended Complaint that added securities fraud claims against defendant Francis J. Saldutti, the Ardent Funds' founder and investment adviser, and Douglas Ballew, Northshore's former CFO.

On February 25, 2005 and March 10, 2005, the Court granted the Commission's motion for a preliminary injunction enjoining all previously-named defendants from violating the federal securities laws, freezing their assets (subject to certain limited exceptions), and appointing a receiver for defendants Northshore, SCM, and the Ardent Funds. The Court's injunctive orders, among other things, specifically granted the receiver exclusive control of Northshore's bank accounts and prevented the defendants from withdrawing, transferring, or concealing any assets from these accounts. Notwithstanding the Court's injunctive orders, on two occasions in March 2005, Wildeman, at Sherman's direction, invaded a Northshore safe deposit box and removed all of its contents.

Upon learning of Wildman and Sherman's actions, the Commission and receiver jointly moved for contempt sanctions. After a hearing at which Wildeman testified and Sherman asserted his Fifth Amendment right against self-incrimination, the Court ruled that Wildeman and Sherman willfully disregarded the Court's injunctive orders by invading the Northshore safe deposit box and removing its contents. The Court awarded the receiver attorneys' fees and related costs, ordered certain other relief, and "[g]iven [Wildeman and Sherman's] unremorseful behavior and many contrived excuses," imposed $2,500 in punitive damages on both Wildeman and Sherman.

For further information see Litigation Release Nos. 19449 and 19084.