Saldutti Settles Northshore Case

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.


In Depth

Q&A: George Schultze On His Fund's Unique Approach to Distressed Investing

Apr 16 2015 | 1:01am ET

George Schultze is a managing member of Schultze Asset Management, a long/short...

Lifestyle

Puerto Rico Woos The Rich But So Far Gains Little

Apr 17 2015 | 2:45am ET

Hedge fund manager Rob Rill grins. He has just had word that U.S. financial regulators...

Guest Contributor

Minnesota Supreme Court Rejects The Ponzi Scheme Presumption: Lenders Claw Back Some Of Their Own Rights

Apr 17 2015 | 9:23am ET

A recent court ruling in Minnesota has put an end to the Ponzi Scheme Presumption...

 

Editor's Note