Litigation Release No. 19773 / July 26, 2006

Securities and Exchange Commission v. Mark R. Conway and Groundswell Partners LLC, Civil Action No. 05-12209-RWZ (D.Mass. filed November 4, 2005)

SEC Obtains Judgment Against Massachusetts Hedge Fund Adviser

The Securities and Exchange Commission announced today that on June 30, 2006, it obtained a default judgment against hedge fund adviser Groundswell Partners LLC, located in Waltham, Massachusetts. The Court's order permanently enjoins Groundswell Partners from future violations of the federal securities laws. The Court also ordered Groundswell Partners to pay disgorgement and prejudgment interest totaling more than $21 million.

On November 4, 2005, the Commission obtained emergency relief, including an asset freeze, when it charged in a Complaint that Groundswell Partners and Mark R. Conway, one of its principals and its portfolio manager, defrauded investors by misleading them about the millions of dollars in losses and the trading strategy employed by the firm. In addition, the Complaint alleges that Conway altered documents to cover-up his misrepresentations.

The Court's action on June 30, 2006 also included entering a default judgment against Groundswell Capital LP (the "Fund"), which was the fund managed by Groundswell Partners and a relief defendant in the action.

Both Groundswell Partners and the Fund failed to appear and respond to the Commission's allegations against them resulting in entry of the default judgments.

Additional information can be found in Litigation Release Nos. 19460 and 19473.