A troubled Connecticut hedge fund has been fined $250,000 over its former brokerage business.
The Nutmeg State's Banking Department said that Southridge Capital Management's defunct brokerage, Southridge Investment Group, failed to keep e-mails from key employees and did not properly control its restricted trading list. The department also revoked SIG's broker registration, a fact that Southridge CEO Stephen Hicks doesn't seem all that concerned about.
"We exited the business a long time ago," he told the Connecticut Post, although he said he was unaware of the fine. The violations cited by the state occurred in 2009.
Hicks and Southridge still face a potentially much more serious legal problem: Both the state and the U.S. Securities and Exchange Commission sued the firm in 2010 for allegedly falsifying the valuation of Southridge's largest holding.
According to the lawsuits, Hicks valued Fonix Corp. almost entirely on its acquisition of two companies he controlled. He collected some $26 million in bogus fees from 2004 through 2007, Connecticut alleges.