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Brook Taube Wells Notice

Brook Taube Wells Notice

A $10 million fine will be paid by Medley Management and the former co-CEOs for deceiving clients and investors.

SEC Files Securities Violation Charges Against Former Co-CEOs and Asset Manager Medley Management

The Securities and Exchange Commission (SEC) filed charges against Medley Management, a publicly traded asset manager, and its former co-CEOs, Brook B. Taube and Seth B. Taube, on April 28, 2022, marking a significant milestone. According to the SEC, the business and its officials used deceptive tactics, which led to a $10 million settlement that will be paid in civil penalties.

The accusations are the result of several false statements made about the company’s anticipated future growth by the Taubes and Medley Management. According to the SEC’s inquiry, Medley has been inflating its assets under management in a number of public

documents, such as paperwork for bond offerings. The omission of “committed capital” levels from non-discretionary clients—who had little investment activity via Medley and were under no contractual duty to do so—was blamed for the overstatement. The false impression of Medley’s strong financial standing and promising future expansion was produced by this deception.

Moreover, the SEC discovered that in June 2018, the Taubes recommended a merger to advising clients based on unverified estimates of Medley’s potential development. These unrealistic predictions were included in estimates of anticipated advantages that investors were shown, which affected their choice to proceed with the merger.

Under federal securities regulations, Lara Shalov Mehraban, Acting Director of the SEC’s New York Regional Office, stressed the significance of giving investors correct information. She said, “The

Taubes neglected to make sure that investors received accurate information about the company’s assets under management and sufficient disclosures about its risks, notwithstanding their position as CEOs of a publicly traded asset manager.”

The Taubes and Medley did not acknowledge or refute the claims; rather, as part of the settlement, they agreed with the SEC’s conclusions. They consented to pay a total of $10 million in civil fines and to refrain from committing similar offenses in the future. Notably, through Medley LLC’s bankruptcy filing, the operating affiliate of Medley, the respondents will satisfy their responsibility by paying bondholders.

Karen Willenken, Alison Conn, Lee Greenwood, and Judith Weinstock of the New York Regional Office headed the SEC’s investigation, with William Uptegrove, Therese Scheuer, and Alistaire Bambach providing support. The situation was supervised by Ms. Mehraban, and the SEC acknowledged the assistance of the Québec Autorité des Marchés Financiers.

The SEC’s dedication to maintaining the integrity of the financial markets and prosecuting individuals who use dishonest tactics is emphasized by this settlement. In order for investors to make wise investment decisions, reliable and clear information should constantly be given to them.

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