Wednesday, 1 July 2015
Last updated 3 hours ago
Jul 2 2008 | 10:23am ET
Hedge fund manager Francis Saldutti has agreed to pay more than $5 million to settle charges that he misled investors in his hedge fund.
According to the Securities and Exchange Commission, Saldutti sold his Saldutti Capital Management to Northshore Asset Management in 2003, but remained the manager of its two hedge funds and became a part-owner and employee of Northshore. Unfortunately for his investors, Northshore’s principals were allegedly skimming off the top, fraudulently diverting millions of dollars of the funds’ assets for their personal use, leaving the funds illiquid and unable to meet redemption requests.
The SEC sued the Northshore principals in February 2005, and six months later added charges against Saldutti, alleging that he misrepresented the sale of his firm to Northshore and numerous conflicts of interest. The regulator said he also provided cover to his new bosses as they defrauded his investors, and failed to disclose material facts to two new investors in late 2004, including that Northshore principal Kevin Kelley had just been arrested and charged with fraud unrelated to the former SCM hedge funds.
Saldutti did not admit or deny the SEC’s allegations in the settlement. In addition to the disgorgement and prejudgment interest, the final judgment permanently enjoins Saldutti from violating antifraud rules.
May 27 2015 | 2:15pm ET
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