There's no direct connection to the American LaFrance Company, but the legal battle involving Lynn Tilton has sparked significant attention in the financial world. According to reports from bizjournals.com, Lynn Tilton, the founder and CEO of Patriarch Partners, is facing a lawsuit from the Securities and Exchange Commission (SEC). The SEC alleges that Tilton defrauded investors and collected $200 million in fees she was not entitled to. In response, Tilton has filed a countersuit, arguing that the SEC violated her constitutional rights by pursuing the case within its own court system rather than in federal court, as reported by Fortune. This isn't the first time concerns have been raised about the SEC’s administrative court system, which is staffed by SEC-appointed judges who often rule in favor of the agency. However, Tilton's reputation as a high-profile figure in the complex world of collateralized loan obligations (CLOs) made it difficult for her to gain public sympathy during her recent media appearances. From SECactions.com: The SEC has charged investment manager Lynn Tilton, known in the industry as the "Diva of Distressed Debt," along with her entities, with fraud. According to the SEC's Order Instituting Proceedings, Tilton allegedly overvalued certain funds in a way that contradicted the authorizing documents and was unknown to investors. This led to unnecessary management fees being paid and compromised investor rights, as detailed in In the Matter of Lynn Tilton, Adm. Proc. File No. 3-16462 (March 30, 2015). Tilton has managed the Patriarch entities for years. These include Patriarch Partners, LLC, Patriarch Partners VIII, LLC, Patriarch Partners XIV, LLC, and Patriarch Partners XV, LLC—each indirectly owned by Tilton or a trust for her daughter. As CEO of Patriarch, she oversees the operations of these entities, which are registered investment advisers and collateral managers for the Zohar Funds. The Zohar Funds are CLOs, a type of securitization vehicle where capital is raised through secured notes. The proceeds are used to purchase commercial loans, and the cash flow from those loans is used to repay note holders. Each fund had a collateral management agreement allowing the manager to select and manage the collateral. The Zohar Funds focused on private, mid-sized distressed companies, aiming to improve their performance and eventually generate profit. Two types of fees were paid: the Senior Collateral Management Fee, based on assets, and the Subordinated Fee, tied to valuation. The indentures governing each fund included specific numeric tests, such as the Overcollateralization Ratio, which measured the cushion between the collateral value and the principal amount of the notes. If ratios fell below thresholds, investors would gain more control, potentially leading to early repayment. Instead of following the indenture requirements, Tilton used her discretion to classify assets, often avoiding downgrades unless she approved them. As a result, few assets were moved to lower valuation categories. Had she followed the indenture guidelines, many more assets would have been classified as defaulting. Some companies failed to pay up to 90% of their interest but were not downgraded, leading to the overpayment of nearly $200 million in Subordinated Fees. Additionally, Tilton did not disclose her discretionary approach to investors, creating a significant conflict of interest. Assets were also not valued in accordance with GAAP, as stated in the financial reports. The SEC alleges willful violations of Advisers Act Sections 206(1), 206(2), and 206(4). A hearing has been scheduled for the proceeding. Horizontal Centrifugal Sewage Pump power submersible pump,chemical centrifugal pump,industrial centrifugal pumps Sichuan Zhongying Industrial Pump Co., Ltd , https://www.zygyb.com
Star Investment Manager and Advisers Charged With Fraud by SEC