Southridge's Hicks Denies Fraud Allegations

Oct 27 2010 | 10:05am ET

Stephen Hicks, the Connecticut hedge fund manager charged with overvaluing his fund's assets, has denied the allegations leveled by the Securities and Exchange Commission and Connecticut authorities.

"Both complaints ignore the fact that Stephen Hicks and his family were large investors in the funds and, if allegations in the complaints were to be believed, they would have been among the so-called scheme's most significant victims," Robert Wolf, a lawyer for Hicks' Southridge Capital Management, said.

Hicks has told staffers at the Ridgefield, Conn.-based hedge fund that "the charges won't stick," Fobes reports.

The SEC and Connecticut allege that Southridge cooked up a bogus value for its largest holding, Fonix Corp., based almost entirely on the speech recognition company's 2004 acquisition of two companies controlled by Hicks. Southridge and Hicks also lied to investors about the firm's strategy, according to the suit, allegedly claiming to have more than three-quarters of the $78.9 million they raised from 2004 through 2007 in liquid assets or cash. But when most of the hedge funds' investors filed redemption requests, they allegedly found them ignored.

All told, according to the Connecticut lawsuit, Hicks and Southridge collected $26 million in fraudulent fees over the 2004 to 2007 period.

"Like many peer hedge funds, Southridge experienced losses and significantly reduced liquidity," Wolf said. "Rather than acknowledging the realities of the credit crisis, the SEC and the State of Connecticut appear to be engaging in an effort to find blame where none exists."


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.