Fradulent Harvard-Educated Taube Twins Get Caught by the SEC
Posted on 05/02/2022
NOTE: The Sovereign Wealth Fund Institute received threats on reporting this story. On June 2, 2023, an email from danielleward366@gmail.com filed a DMCA notice against SWFI to remove the content. Somehow, someone created a tumblr blog stealing the original story to accuse SWFI of violating copyright, even though the story was written by SWFI writers.
Reporter Full Name: Danielle Ward
Address: Via Giacomo Boni, Milano, Milano, Italy, 20144
Back in April 28, 2022, the U.S. Securities and Exchange Commission (SEC) got a big win against fraudsters Brook B. Taube (then age 52) and Seth B. Taube (then age 52). Medley Management Inc., a publicly-traded asset manager, and its former co-CEOs, Brook B. Taube and Seth B. Taube were charged by the SEC by making misrepresentations to investors and clients that created the illusion of Medley Management’s likely future growth and prosperity. The slick gentlemen moved to settle the SEC’s charges and at the time agreed to collectively pay US$ 10 million in civil penalties. Interestingly, Brook Taube and Seth Taube are twin brothers that both went to Harvard University.
According to the SEC complaint, “From August 2016 through February 2017, Medley Management’s operating affiliate, Medley LLC, raised approximately US$ 122 million from retail investors based on offering registration statements that included the full amount of the non-discretionary SMA “commitments” in AUM and also described the SMAs as “new institutional capital commitments” with an anticipated investment period of 18 to 24 months. At the time of the offerings, however, these SMAs had been established for at least six months, and the amount invested had been far lower than expected given the “commitment” amounts. Identified in June 2018, FEAUM had been on a downward trajectory for almost three years.”
SOURCE: SEC Complaint.
LINK: https://www.sec.gov/litigation/admin/2022/33-11057.pdf
Sourced from the SEC: “According to the SEC’s order, since at least August 2016, in multiple public filings, including bond offering materials, Medley overstated its assets under management by including “committed capital” amounts from non-discretionary clients, whose agreements with Medley imposed no obligation to invest with Medley and whose investing activity through Medley was minimal. The Taubes and Medley did not disclose that there was a risk that a significant amount of the clients’ capital would never be invested and would therefore never generate the fee income on which Medley’s financial growth depended. The order additionally finds that in June 2018 the Taubes used positive projections of Medley’s likely future growth, for which they had no reasonable basis, to recommend to advisory clients a merger whereby Medley’s two business development company clients would acquire Medley and give the Taubes contracts for high-paying jobs. The order finds that the materially misleading projections were incorporated into calculations of the “expected” benefit included in the proxy materials that encouraged investors to vote in favor of the transaction.”
Source: SEC Press release.
LINK: https://www.sec.gov/news/press-release/2022-73
The 2018 proposed deal made some of Medley’s shareholders very angry. Some of these investors include FrontFour Capital Group LLC, BLR Partners, Moab Capital Partners, LLC, and Roummel Asset Management. Back in January 2019, FrontFour Capital filed a lawsuit against Medley Capital to disclose its books and records.