A subsidiary of RAIT Financial Trust has agreed to pay
more than $21 million to settle charges brought by the Securities and Exchange
Commission alleging it fraudulently retained fees that rightfully belonged to
its clients.
Taberna Capital Management failed to inform its
collateralized debt obligation clients that it was receiving so-called exchange
fees related to restructurings it was undertaking between 2009 and 2012, and
received “millions of dollars” in these fees, according to the SEC.
justice
“Taberna’s retention of the exchange fees was neither
permitted by the CDOs’ governing documents nor disclosed to investors in the
CDOs,” the SEC said in a statement. “The fees rightfully belonged to the CDOs
and created conflicts of interest that Taberna failed to disclose.”
The SEC brought charges against Michael Fralin, Taberna’s
former managing director, and Raphael Licht, the firm’s former chief operating
officer for their involvement with Taberna’s misconduct.
As a result of the investigation and settlement, Fralin
agreed to pay a $100,000 penalty and is barred from the securities industry for
at least five years. Licht agreed to pay a $75,000 penalty and is barred from
the securities industry for at least two years.
Taberna, Fralin and Licht consented to the SEC’s order
without admitting or denying the findings. Fralin and Licht have are no longer
employed by RAIT.
This settlement had been in the works for some time.
A year ago, the RAIT disclosed it had reached an
agreement in principle with the SEC. An order was entered this past Sept. 2 and
publicly disclosed.
RAIT (NYSE: RAS) already took a charge of $21.5 million
relating to the settlement. The company is based in the Cira Centre in
Philadelphia.
Source: Philadelphia
Business Journal
No comments:
Post a Comment