RIDGEFIELD, Conn., Oct. 28 /PRNewswire/ -- In response to the complaints filed by the SEC and the State of Connecticut on October 25, 2010, Robert Wolf, an Attorney for Southridge Capital Management and Stephen Hicks, stated:
"We find their allegations to be baseless. Neither Southridge nor Stephen Hicks has committed fraud or engaged in violations of the securities laws, and both Mr. Hicks and Southridge categorically deny any wrongdoing."
Both the SEC and the Connecticut Department of Banking fail to account for the impact of the global credit crisis on the performance and liquidity profile of the funds. Like many peer hedge funds, Southridge experienced losses and significantly reduced liquidity. 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.
"Southridge has consistently sought to protect and enhance the value of the capital that the investors in Southridge funds entrusted to them. The funds operated in an open and transparent manner and none of the investors who committed capital to these funds was ever defrauded.
The SEC and Connecticut Attorney General's Office have focused on a handful of positions in the structured finance segment of Southridge's business, ignoring over 250 Southridge fund investments totaling in excess of $1 billion invested in the companies that it financed. Allegations that Southridge collected $26 million in improper fees have absolutely no basis in fact.
All of these positions were suitable investments for sophisticated investors under the respective limited partnership agreements and were valued fairly in accordance with the fully disclosed valuation policy of the funds, a conclusion supported by Southridge's independent auditor," added Mr. Wolf.
Southridge and Stephen Hicks are represented by:
Robert Wolf of Gersten Savage, LLP and Patrick Smith of DLA Piper.
SOURCE Southridge Capital Management