The U.S. Supreme Court rejected an appeal by Lynn Tilton, the Patriarch Partners founder once known as the “Diva of Distressed," refusing to intervene in a Securities and Exchange Commission case that could bar her from the securities industry.
Tilton is fighting an SEC administrative complaint that accuses her of misleading investors about the value of risky pools of corporate loans. A ruling from a judge at the SEC could come any day.
Tilton argued in her appeal that the SEC’s use of in-house judges is unconstitutional and gives the agency an unfair advantage. She will have another chance to make that argument -- and perhaps seek Supreme Court review -- should the SEC judge rule against her.
The agency says Tilton overcharged investors almost $200 million on fees she collected on $2.5 billion of collateralized loan obligations she created to help fund her various businesses. Patriarch and Tilton say the claims are meritless.
Federal courts are divided on the constitutionality of SEC judges. With Tilton, two lower courts said they didn’t have the power to consider that issue until the case first made its way through the SEC.
In September, the Supreme Court refused a request by Tilton to block the SEC proceeding from going forward.
The case is Tilton v. SEC, 16-906.
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