In the Matter of Taberna Capital Management, LLC, et al.
Admin. Proc. File No. 3-16776
On September 2, 2015, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings ("Order") against Taberna Capital Management, LLC ("Taberna"), Michael Fralin ("Fralin"), and Raphael Licht ("Licht") (collectively, the "Respondents"). The Commission found that, between 2009 and 2012, in connection with restructuring transactions undertaken between Taberna's collateralized debt obligation ("CDO") clients and the issuers of the underlying obligation in the Taberna CDO portfolios, Taberna retained over $15 million in certain fees ("Exchange Fees") that should have been paid to the CDOs. The Commission further determined that the retention of Exchange Fees created actual and potential conflicts of interest that Taberna failed to disclose to its clients. The Commission found that Fralin and Licht played key roles in the misconduct. The Commission ordered, and Taberna has paid, a total of $15,000,000.00 in disgorgement and prejudgment interest into a fund for distribution (the "Disgorgement Fund"). The Order directs that the Disgorgement Fund be distributed pursuant to a distribution plan to the parties injured by the misconduct in the amounts necessary to compensate them for the harm they suffered. Any remaining funds in the Disgorgement Fund after distribution are to be to be remitted to the United States Treasury. See the Commission's order: Release No. 34-75814.
On August 24, 2017, the Commission issued an order establishing a fair fund (“Fair Fund”) for the $21,6000,000.00 in disgorgement, prejudgment interest, and civil penalties paid by the Respondents for distribution to harmed investors. See the Commission’s order: Release No. 34-81477.
For more information, please contact the Commission:
Office of Distributions