A Philadelphia investment advisory firm has agreed to pay $21.5 million to settle U.S. Securities and Exchange Commission civil charges that it fraudulently retained fees belonging to collateralized debt obligation clients.
The SEC on Wednesday said Taberna Capital Management kept the "exchange fees" in connection with restructuring transactions even though the fees rightfully belonged to the CDO clients, and the retention was neither disclosed nor permitted by the CDOs' governing documents.
Taberna agreed to pay a $6.5 million penalty, $13 million of disgorged profit and $2 million interest, and accept a three-year investment adviser ban. Two former officials, managing director Michael Fralin and chief operating officer Raphael Licht, settled related charges. None admitted wrongdoing.
(Reporting by Jonathan Stempel in New York; Editing by Andrew Hay)
