U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20632 / July 1, 2008

Securities and Exchange Commission v. Northshore Asset Management, et al., Civil Action No. CV 05-2192(WHP) (S.D.N.Y.)

Judge Enters Final Judgment Against Defendant Francis J. Saldutti

The Securities and Exchange Commission announced today that in SEC v. Northshore Asset Management, et al., CV 05-2192 (WHP) (S.D.N.Y.), Judge William H. Pauley III entered a final judgment against defendant Francis J. Saldutti ("Saldutti"). The final judgment permanently enjoins Saldutti from violating the antifraud provisions of the federal securities laws and requires him to pay more than $5,082,138 in disgorgement and prejudgment interest. Saldutti consented to entry of the final judgment without admitting or denying the allegations of the Commission's Second Amended Complaint.

On February 16, 2005, the Commission filed SEC v. Northshore, alleging that, in April 2003, defendant Northshore Asset Management LLC ("Northshore") and its three principals, defendants Kevin Kelley ("Kelley"), Glenn Sherman ("Sherman"), and Robert Wildeman ("Wildeman") (together, the "Northshore Defendants"), purchased Saldutti Capital Management, L.P. ("SCM") from Saldutti and thereby obtained control over two hedge funds, Ardent Research Partners L.P. and Ardent Research Partners Ltd. (together, the "Ardent Funds"). Kelley, Sherman, and Wildeman proceeded fraudulently to divert tens of millions of dollars of the Ardent Funds' cash assets to their own personal use, including purported personal loans and self-dealing investments. Consequently, by early 2005, 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 and investment adviser fraud claims against Saldutti, the Ardent Funds' founder and investment adviser, and Douglas Ballew, Northshore's former CFO. In March 2008, the Commission filed a Second Amended Complaint that, among other things, added certain factual allegations against Saldutti. The Commission alleged that after his sale of SCM to the Northshore Defendants, Saldutti remained as the portfolio manager of the Ardent Funds and became a part owner, creditor, and employee of Northshore. The Commission alleged that Saldutti failed to disclose adequately, and made affirmative misrepresentations regarding, the sale of SCM to Northshore and his numerous conflicts of interest to the Ardent Funds and the Ardent Funds' investors. The Commission also alleged that Saldutti failed to disclose adequately, and made affirmative misrepresentations regarding, his transfer of tens of millions of dollars of Ardent Funds' cash from their prime brokerage accounts to Northshore-controlled accounts. The Commission further alleged that Saldutti failed to disclose certain material facts to two new investors that he welcomed to the Ardent Funds in late 2004, including the fact that Kelley had been arrested and charged with unrelated investment advisers fraud in early December 2004.

Judge Pauley previously entered final judgments against Wildeman on May 2, 2008 and Kelley and Ballew on May 19, 2008. Sherman passed away in August 2007.

For further information see Litigation Release Nos. 19449, 19084, and 19733.