Private equity investor Lynn Tilton, the “diva of distressed,” is on CNBC defending herself against the fraud charges brought by the Securities and Exchange Commission.
This week, the SEC charged Tilton and her firm Patriarch Partners with fraud for allegedly hiding poor performance in in three collateralized loan obligation (CLO) funds going back to 2003.
The case against Tilton involves CLO funds known as the Zohar Funds, which make loans to distressed companies that become assets. Collectively, the Zohar Funds have $US2.5 billion in assets. The SEC claimed that many of the distressed companies in the Zohar Funds have performed poorly, and some also failed to make interest payments. The SEC claimed that Tilton left the valuations unchanged and was able to collect $US200 million in management fees.
Patriarch said in a statement that the SEC’s allegations are “ill-founded and at odds with Patriarch’s investment strategy.”
On Wednesday, Tilton filed a counter-suit against the SEC alleging that the administrative proceeding violates the US Constitution. Basically, Tilton wants to have her case moved to the US Southern District of New York.
We’re updating this post live.