SEC Files Emergency Action to Halt Ongoing Fraud by Northshore Asset Management
In its complaint, the Commission alleges that Northshore, through its principals, diverted approximately $37 million of the funds’ assets to their control and invested them in illiquid securities of, and made loans to, entities in which Northshore and its principals have interests.
In its complaint, the Commission names Northshore, Ardent Domestic, Ardent Offshore (collectively, the Ardent Funds), Saldutti Capital Management, L.P. (SCM), Kevin Kelley, Robert Wildeman and Glenn Sherman. The Commission’s complaint further alleges that:
- the defendants did not disclose to the Ardent Funds’ investors that Northshore had purchased SCM, investment adviser to the Ardent Funds, and that Northshore was now managing a significant portion of the Ardent Funds’ assets;
- 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; and
- for the last several months, the defendants have refused to honor valid redemption requests from Ardent Domestic investors.
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 federal securities laws, and a final judgment ordering the defendants to disgorge ill-gotten gains, and assessing civil penalties.