Harvard-educated, CFA-certified, and co-founder of what he positioned as a serious institutional credit manager, Brook Taube spent 15 years building Medley Management Inc. into a publicly traded alternative asset management platform with multiple NYSE-listed vehicles, over $5 billion in reported assets, and a client base that included tens of thousands of retail bondholders.
The SEC’s April 2022 enforcement action, a Delaware court’s 2019 ruling, and a bankruptcy filing that left equity holders with nothing together tell a different story: a firm built on systematically inflated metrics, dominated by two brothers whose personal financial interests overrode every governance structure designed to protect investors, and run into the ground while collecting management fees regardless of performance. Brook Taube personally paid $4 million in civil penalties. He kept his board seat.
How Medley Overstated Assets Under Management by Over $1 Billion Across Five Years of Public Filings
The misrepresentation ran from August 2016 through April 2021 and appeared in bond offering materials, quarterly reports, proxy filings, and merger documents. Medley’s reported assets under management consistently included “committed capital” from non-discretionary separately managed accounts held by clients who had no contractual obligation to deploy that capital with Medley and whose actual investing activity was minimal.
Two accounts anchored the inflation. The first claimed an $800 million commitment but invested only $81 million over two and a half years. The second reported $250 million in committed capital while actually deploying $49 million across the same period. Real deployment ran at 10 to 20 percent of the figures being reported. By counting these phantom commitments, Medley overstated its headline AUM figure by more than $1 billion, distorting its reported $5 billion in assets by approximately 20 percent.
That inflated number fed directly into four “baby bond” offerings between August 2016 and February 2017 that raised $122.6 million from retail investors. Taube signed the registration statements. As the full collapse of Medley LLC shows, the bondholders who purchased those notes on the basis of Medley’s growth narrative later found themselves as creditors in a Chapter 11 bankruptcy with $5.4 million in assets against $140.8 million in liabilities. The SEC’s Administrative Proceeding File No. 3-20836 found that Taube, as co-CEO, had certified disclosure controls that did not exist, in violation of Exchange Act Rule 13a-15(a).
The Self-Dealing Merger Proposal That a Delaware Court Found Violated Fiduciary Duties
In August 2018, Taube proposed a three-way transaction: Sierra Income Corporation would acquire Medley Capital Corporation, and the combined entity would then acquire Medley Management at a 100 percent premium to its market price. Medley Capital shareholders received no premium to net asset value. Taube personally stood to receive a $600,000 annual salary plus up to $3.2 million in incentive compensation under the new structure, extracted from a company he had already run into bottom-quartile performance.
Delaware Court of Chancery Vice Chancellor Kathaleen McCormick reviewed over 800 exhibits, including text messages between Taube and supposedly independent board members. One director, when a shareholder publicly criticized the merger, texted Brook directly: “Are we going to respond to every f**ksake on the planet?” The messages demonstrated that the special committee formed to evaluate the merger independently was not independent. In her March 11, 2019 ruling, McCormick found that “the Taube brothers dominated and controlled the board” of Medley Capital, that Brook had communicated inappropriately with directors throughout the evaluation process, and that the transaction had been structured to benefit the Taubes at shareholders’ expense.
The merger was abandoned. What the discovery process also revealed was that approximately 30 potential buyers had reviewed Medley Management in 2017 and none had made an offer. The market had already rendered its verdict. The proposed merger was the response to that verdict.
Wells Fargo Called Medley One of the Worst BDCs in the Industry and the Numbers Confirmed It
As CEO and chairman of Medley Capital Corporation from its January 2011 IPO through 2021, Taube presided over a record that Wells Fargo analysts described as among the worst in the BDC sector. Portfolio company distress rates exceeded industry norms, non-accrual loans reached levels that peers managed to avoid, and distributable income declined while management fees continued flowing to Medley regardless of investment outcomes.
Investors who bought Medley Capital at the January 2011 IPO price of $12 per share suffered losses that continued through the company’s eventual renaming as PhenixFIN Corporation after it severed ties with the Taubes in November 2020. Medley Management, which had priced its September 2014 IPO at $18 per share after missing its own expected range of $20 to $22, was delisted by the NYSE in July 2021 at a 67 percent loss. The Taubes had structured the IPO to retain 97.5 percent of voting control through dual-class shares, meaning that throughout the company’s public life, outside shareholders had virtually no ability to hold management accountable.
The American Web Loan RICO Case and the Lending Operation That Charged 500 Percent Interest
Taube was named as a defendant in Solomon v. American Web Loan, a RICO class action filed in the Eastern District of Virginia in December 2017. The suit alleged that Medley entities provided $23 million in financing to American Web Loan Holdings, enabling a lending operation that charged interest rates exceeding 500 percent annually through a “rent-a-tribe” arrangement designed to evade state usury laws. The class covered 606,318 individuals who took out more than one million loans between January 2012 and June 2020.
The case settled for $182 million, with $86 million in cash, $76 million in loan cancellations, and additional payments. American Web Loan had become one of Medley’s better-performing investments under Taube’s oversight, profitable precisely because of the rates that many states had determined were illegal under usury law.
The Resignation Timed to the Bankruptcy and the SEC Penalty That Left the Board Seat Intact
Medley LLC filed Chapter 11 bankruptcy on March 7, 2021. Brook Taube resigned as co-CEO on May 3, 2021, one month after the filing. On May 7, 2021, the SEC issued Wells Notices to Taube and Medley entities. The April 28, 2022 settlement required him to pay $4 million in civil penalties and accept a censure and cease-and-desist order, but imposed no officer and director bar. His twin brother Seth Taube, who paid $2 million in the same settlement, followed an identical exit pattern at Sierra Income Corporation, where nearly $1 billion in retail investor capital was lost across the fund’s life and NAV collapsed 47 percent from the original offering price.
As of late 2025, Brook remains co-chairman of Medley Management’s board — a company with minimal operations and no active trading market. Both brothers maintain public profiles emphasizing entrepreneurship and philanthropy, with promotional materials that minimize or omit the SEC settlement, Delaware court ruling, and bankruptcy.
Conclusion
Brook Taube was never criminally charged. The settlement allowed him to neither admit nor deny wrongdoing. He retained the right to serve on public company boards. The retail bondholders who bought Medley’s notes on the basis of AUM figures he had certified received zero equity recovery in the bankruptcy. The shareholders of a BDC Wells Fargo called one of the industry’s worst recovered what the market left them. The $4 million penalty represented a fraction of the fees Medley collected while misrepresenting its financial position. The case is not an anomaly in alternative asset management. It is a clear illustration of what concentrated voting control, external management fee structures, and uninvestigated disclosure practices produce when left unchecked long enough.
