In the Matter of Aladdin Capital Management LLC, et al.
Admin. Proc. File No. 3-15134
- In the Matter of Joseph A. Schlim
Admin. Proc. File No. 3-15135
On December 17, 2012, the Commission separately instituted and simultaneously settled proceedings against Aladdin Capital Management LLC and Aladdin Capital LLC (collectively, "Aladdin") and Joseph A. Schlim (collectively, the “Respondents”). The Commission found that Aladdin misled investors regarding co-investments in two collateralized debt obligations ("CDOs") that Aladdin managed and marketed, and that Schlim, who was responsible for ensuring that Aladdin co-invested alongside its clients in the CDOs, but failed to ensure that Aladdin actually did so. Aladdin was ordered to pay disgorgement of $900,000.00, prejudgment interest of $268,831.00, and a civil money penalty of $450,000.00. Schlim was ordered to pay a civil money penalty in the amount of $50,000.00. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, each order created a Fair Fund for the disgorgement, prejudgment interest, and penalties ordered. See the Commission's orders: Releaase Nos. 33-9375 and 33-9376.
The Respondents have collectively paid $1,668,831.00 as ordered, into their respective fair fund.
On May 22, 2017, the Commission issued an order consolidating the two fair funds into one Fair Fund (“Fair Fund”) for the purposes of distributing the funds for the benefit of the investors harmed by the Respondents misconduct. See the Commission’s order: Release No. 34-80742.
On October 19, 2017, the Commission published a notice of proposed plan and opportunity to comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The Proposed Plan proposes Catherine E. Pappas, a Commission employee, act as the Fund Administrator to the Fair Fund. The Proposed Plan provides the public with 30-days to comment on the Proposed Plan. See the Commission’s notice: Release No. 34-81910 and the Proposed Plan.
On November 30, 2017, the Commission issued an order approving the plan of distribution, along with the approved plan of distribution (“Plan”). See the Commission’s Order: Release No. 34-82183 and the Plan.
The Plan proposes to distribute all funds currently in the Fair Fund, less taxes, fees, and expenses, to the investors harmed by the conduct described in the Orders in proportion to their respective losses (collectively, the “Harmed Investors”). Based on information obtained by the Commission staff during its investigation and the review and analysis of applicable records, the Commission staff has identified three (3) Harmed Investors, calculated their losses, and confirmed the calculated losses with each of the Harmed Investors. The Fair Fund is not being distributed according to a claims-made process, so the procedures for providing notice and for making and approving claims are not applicable.
On December 22, 2017, the Commission issued an order directing disbursement of $1,660,401.53 from the Fair Fund to harmed investors as provided for in the Plan. See the Commission’s order: Release No. 34-82400.
On August 30, 2018, the Commission issued an order approving a second disbursement of $1,655.00 from the Fair Fund for distribution to harmed investors in accordance with the Plan. See the Commission’s order: Release No. 34-83996
For more information, please contact the Fund Administrator:
Catherine E. Pappas
Division of Enforcement
Telephone Number: 215-597-0657