The Securities and Exchange Commission obtained an emergency court order Wednesday to freeze the assets of NorthShore Asset Management, a Chicago-based investment advisor that invests in hedge funds, accusing the firm and three of its officers of misappropriating $37 million. Named in the complaint were NorthShore executives Kevin Kelley, Robert Wildeman and Glenn Sherman.

The Commission said that NorthShore didn't tell investors in the Ardent Domestic and Ardent Offshore hedge funds that it had acquired the funds' investment advisor, Saldutti Capital Management, and had put a significant portion of their assets into illiquid securities and personal loans. NorthShore tried to hide this from the Ardent investors by issuing fake statements and, ultimately, was unable to honor a number of redemption requests.

Kelley, NorthShore's former CEO, has already been under investigation and facing criminal charges for some time, through a complaint filed last December in a New York federal court for his role as a stockbroker for AIG's Royal Alliance. Following two customer complaints, including one involving $22 million, the brokerage firm fired Kelley in April. At the same time, Kelley was running his own asset management firm, Acorn Research & Management, which, federal regulators said, was merely a scheme to defraud investors.

The SEC is charging the parties with violating securities laws and is seeking to obtain their ill-gotten gains.

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