Medley Management Faces SEC Charges: Taubes to Pay $10M in Civil Penalties

In the world of finance, trust is paramount. Investors rely on accurate and transparent information to make informed decisions about where to place their hard-earned money. However, a recent SEC settlement involving Medley Management and its former co-CEOs, Brook B. Taube and Seth B. Taube, has sent shockwaves through the industry, raising questions about the integrity of one of the most fundamental aspects of investing: disclosure.

The Securities and Exchange Commission (SEC) recently charged Medley Management and the Taube brothers with misleading investors and clients by overstating the company’s assets under management. The SEC’s investigation revealed that since at least August 2016, Medley had been inflating its assets by including “committed capital” amounts from non-discretionary clients, without disclosing the associated risks.

What’s particularly alarming is the revelation that the Taubes used optimistic projections of Medley’s future growth to push through a merger that would benefit them personally. These projections lacked any reasonable basis and were incorporated into materials designed to persuade investors to approve the merger.

Lara Shalov Mehraban, Acting Director of the SEC’s New York Regional Office, emphasized the importance of accurate information for investors. She noted that the Taubes, as CEOs of a publicly-traded asset manager, failed in their duty to provide correct information and adequate disclosures about the company’s risks.

The settlement reached with the SEC requires the Taubes and Medley to collectively pay $10 million in civil penalties. Additionally, they are required to cease and desist from future violations, be censured, and pay restitution to bondholders. Importantly, the penalty payment is structured to expedite compensation to bondholders through Medley’s bankruptcy proceeding.

This case highlights the critical role of regulatory oversight in maintaining the integrity of financial markets. It also serves as a reminder to investors to remain vigilant and conduct thorough due diligence before making investment decisions.

Medley Management Inc., Brook B. Taube & Seth B. Taube

In conclusion, the Medley Management saga underscores the importance of transparency and accountability in the financial industry. Investors should demand nothing less than complete and accurate information from the companies they invest in, and regulators must remain vigilant in enforcing compliance with the law. As for Brook Taube and his associates, this settlement serves as a stark reminder that shortcuts and misleading tactics will not go unnoticed or unpunished in the eyes of the law.