Lynn Tilton, whose aggressive management style made her a success on male-dominated Wall Street, won a U.S. Securities and Exchange Commission trial she’d spent months fighting to avoid.
SEC administrative law judge Carol Fox Foelak ruled in favor of Tilton over allegations that she and her firm, Patriarch Partners LLC, bilked investors out of more than $200 million.
“It is concluded that the violations” alleged by the SEC are “unproven,” Foelak wrote in her ruling issued Wednesday. “Thus, the proceeding will be dismissed.”
The decision follows a three-week trial that ended last November. Tilton, who repeatedly argued that the SEC’s internal legal process is unfair to defendants, went all the way to the U.S. Supreme Court in her unsuccessful efforts to have the case heard in federal court, rather than before an SEC administrative judge.
In a finance career that’s spanned more than three decades, Tilton has gained notoriety for her unique spin on the common Wall Street practice of buying failing companies and then trying to turn them around.
What set Tilton apart is that she owned the struggling businesses, while also controlling investment funds that lent them money. She did this by raising cash from clients and issuing securitized debt that was largely backed by loans to her portfolio companies.
The SEC sued Tilton in March 2015, alleging she defrauded her investors by telling them the loans were sound even though the companies had made partial or no interest payments for years. The agency sought the return of more than $200 million in fees that Patriarch collected for managing clients’ money.
“After nearly eight years of false and reputation-damaging allegations by the SEC, justice has finally been delivered,” Tilton said in an emailed statement.