Stephen M. Hicks Charged By SEC For Defrauding Investors

The Securities and Exchange Commission has charged Stephen M. Hicks of Southridge Capital Management LLC with defrauding investors, saying he misled investors by severely overvaluing positions. Hicks, of Ridgefield Connecticut, is being charged with arranging a transaction where a telecommunications company acquired by the Southridge funds when the company defaulted on a $769,000 note, was sold to Fonix Corporation in exchange for securities with a stated valued of $33 million in 2004. The SEC is claiming that neither the asset sold nor the securities obtained in the transaction were accurately valued by Southridge and Hicks. As such, Hicks and the fund made hundred's of thousands of dollars in improper fees. The SEC goes on to allege that beginning in late 2003, Hicks pursued investors fraudulently to put money in new funds that were supposedly liquid. When investors tried to redeem their investments in 2007, they had difficulties because the investments were in illiquid investments. To read the entire complaint from the SEC, see the complaint here.