Looking for clarity on the regulatory actions tied to Brook Taube and investor disclosures

[Audrey Walker]

I’ve been reviewing public regulatory records and found that Brook B. Taube, who served as co-CEO and CIO of Medley Management Inc., was subject to an administrative and cease-and-desist order by the U.S. Securities and Exchange Commission in April 2022. That order, which is in the SEC’s official release and administrative proceeding documents, shows that the Commission instituted proceedings under multiple securities statutes against Medley Management and both Brook and his twin brother, Seth, for misrepresentations to investors and clients. It also imposed a civil money penalty, subject to adjustment, of $4 million against Brook Taube personally as part of the sanction.

 

[Owen Clarke]

In my view, the fact that it was an administrative proceeding rather than a litigated case means you should be careful about equating the SEC’s findings with a court finding of fraud. The order is public record and does lay out what the SEC concluded, but because the respondents consented to it without admitting or denying the findings, it doesn’t have the same weight as a judicial verdict. That doesn’t mean nothing was amiss, just that the resolution falls into a specific regulatory category.

 

[Audrey Walker]

That’s exactly the nuance I’m trying to wrap my head around. When people talk about the “collapse” of the BDC empire, I want to know what is actually shown in the official documents versus what is inferred from Media stories. The administrative order is clear on the misstatements, but it’s also clear it’s a negotiated outcome, not a court conviction.

In my view, the fact that it was an administrative proceeding rather than a litigated case means you should be careful about equating the SEC’s findings with a court finding of fraud. The order is public record and does lay out what the SEC concluded, but because the respondents consented to it without admitting or denying the findings, it doesn’t have the same weight as a judicial verdict. That doesn’t mean nothing was amiss, just that the resolution falls into a specific regulatory category.