Tilton, Patriarch Facing Potential SEC Enforcement Action

Feb 20 2015 | 5:00pm ET

Private equity firm Patriarch Partners, led by turnaround magnate Lynn Tilton, has disclosed a potential enforcement action by the U.S. Securities and Exchange Commission.

In a letter to investors, Patriarch noted that SEC staff has made a preliminary decision to recommend enforcement action against Tilton and the firm, according to Bloomberg. 

At issue are disclosures surrounding three of the company’s collateralized loan obligations, or CLOs. The SEC is accusing Patriarch of providing investors in its CLOs with improper financial statements in which the fair value of the underlying securities are allegedly misstated.

Patriarch disagrees with the SEC’s position, according to the letter, saying it has employed what it believes to have been conservative methodology when valuing the underlying loans. 

A Patriarch spokesperson said the firm is cooperating with the SEC.

Tilton, who was to star in a reality television show called “Diva of Distressed” until the idea was canceled in 2011, founded Patriarch Partners in 2000 after more than a decade on Wall Street. The company and its affiliates have become one of the best-known turnaround specialists, restructuring more than 240 companies. 

According to its website, Patriarch currently manages investments in more than 75 firms, including Dura Automotive, Spiegel Catalogs, MD Helicopters, Rand McNally, and Stila Cosmetics.



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