Medley Management and Former Executives to reportedly Pay $10 Million Fine for Misleading Clients and Investors  

According to a press announcement on April 28, 2022, the Securities and Exchange Commission reportedly charged publicly-traded asset manager Medley Management and its former co-CEOs with making misrepresentations to investors and clients about the company’s future growth. Medley and its Co-CEOs reportedly agreed to settle charges with $10 million in civil fines.  

According to the SEC’s complaint, since at least August 2016, Medley allegedly overstated its assets under management by including “committed capital” amounts from non-discretionary clients. Medley and the two executives purportedly failed to disclose that there was a risk that much of the clients’ capital would never be invested and would therefore never generate the fee income on which Medley’s financial growth depended.  

According to the SEC’s complaint, in June 2018 the two Medley co-CEOs reportedly used positive company projections to recommend to advisory clients a merger in which two company clients would acquire Medley and would give the executives contracts for lucrative jobs.   

The SEC reportedly finds that the co-CEOS allegedly used misleading projections to encourage investors to vote in favor of the merger. According to the SEC, the executives “failed to ensure that investors were given correct information about the company’s assets under management and adequate disclosures about its risks.”  

Without admitting or denying the SEC’s findings, the two executives and Medley agreed to cease and desist from committing or causing any future violations of these provisions, to be censured, and to pay a total of $10 million in civil penalties. The respondents are expected to satisfy their obligation to pay this penalty by making payments to bondholders in the bankruptcy proceeding of Medley’s operating affiliate, Medley LLC.  

On March 8, 2021, Medley LLC filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, case number 20-10526 .   

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