Seth Taube Inflated Medley’s Assets by $1B and Paid $2M to SEC

The résumé read like a checklist for institutional credibility. Harvard undergraduate degree. A Rotary Foundation Fellowship and economics degree from St. Andrews. An MBA from Wharton. Stints at Morgan Stanley and Tiger Management. It was precisely those credentials that made Seth B. Taube, 53, of San Francisco, California, and the firms he built under the Medley Management banner so attractive to the retail investors and bondholders who put their capital in his hands. Between 2016 and 2021, while serving simultaneously as co-CEO of Medley Management and CEO of Sierra Income Corporation, Taube helped construct a multi-year misrepresentation of the firm’s assets under management — inflating reported figures by more than $1 billion — and pushed proxy materials for a self-dealing merger a Delaware court ultimately blocked as a breach of fiduciary duty.

On April 28, 2022, the SEC settled charges against Taube, his twin brother Brook Taube, and Medley Management for a combined $10 million in civil penalties, with Seth personally paying $2 million. The settlement allowed him to neither admit nor deny wrongdoing. His twin brother Brook, who this publication has covered separately, paid $4 million. No criminal charges were filed against either man. As of April 2026, Taube remains co-chairman of Medley Management’s board and is actively building new ventures.

How Phantom Capital Commitments Added $1 Billion to Medley’s Reported Assets

The mechanics of the AUM inflation were straightforward enough that the SEC’s order describes them in a single operational sentence. Beginning in August 2016, Medley began including “committed capital” from two non-discretionary separately managed accounts in its publicly reported assets under management. The clients holding those accounts had no contractual obligation to invest with Medley and, in practice, barely did. One account claimed a commitment of $800 million but invested only $81 million over two and a half years. The other claimed $250 million and invested $49 million over the same period — roughly 10 to 20 percent of the figures Medley reported to the public.

Taube, as co-CEO, signed certifications asserting the company maintained adequate disclosure controls. According to the SEC, no such controls existed. The inflated AUM flowed directly into four “baby bond” offerings between August 2016 and February 2017 that raised $122.6 million from retail investors. Those investors bought notes based on a growth narrative that Taube had certified as accurate. The narrative was not accurate. Since management fees were calculated as a percentage of assets under management, the inflated figures also generated fee income on a base that overstated Medley’s true earning power. The SEC’s acting New York Regional Director described the conduct plainly: investors are entitled to complete and accurate information, and the Taubes failed to provide it.

The Self-Dealing Merger a Delaware Court Called a Fiduciary Breach

In June 2018, while the AUM inflation was ongoing, Taube and his brother proposed a three-way merger designed to benefit themselves at the expense of the shareholders they represented. The structure called for Sierra Income Corporation, where Seth was CEO, to acquire Medley Capital Corporation. The combined entity would then acquire Medley Management, the firm the brothers ran. Upon completion, Seth Taube would receive $480,000 in annual salary plus up to $1.75 million in incentive compensation — extracted from companies he had mismanaged into distress.

The merger projections embedded in the proxy materials assumed that the non-discretionary clients whose capital Medley had been claiming would suddenly invest at five times their historical rate. They also assumed interval funds that had raised no capital for over a year would begin raising significant assets. Vice Chancellor Kathaleen McCormick of the Delaware Court of Chancery found in a March 2019 opinion that the Taube brothers “dominated and controlled” the Medley Capital board and that supposedly independent directors were in fact beholden to them throughout the merger process. The court blocked the merger and ordered corrective disclosures. By May 2020, the transaction was formally terminated. The projections embedded in the proxy materials, the SEC later found, had no reasonable basis.

Sierra Income’s 47% Collapse and the Retail Investors Who Funded It

Sierra Income Corporation launched in April 2012 as a non-traded business development company designed to provide retail investors with income through middle-market debt investments, offering shares at $10 each. Taube served as CEO and Chairman from inception. The fund raised nearly $1 billion through more than 110 broker-dealers representing 27,800 registered investment advisors. By March 31, 2021, net asset value had collapsed to $5.28 per share — a 47.2 percent loss from the offering price — while Taube’s management entities collected fees calculated on assets under management regardless of performance.

In April 2020, Sierra suspended its monthly distributions to shareholders, citing COVID-19 uncertainty. The reality was that the portfolio had deteriorated under decisions made during Taube’s nine-year tenure as CEO. The external management fee structure, which compensated Taube’s entities based on asset levels rather than returns, created a direct incentive to grow the fund and hold it open regardless of investment quality. On March 25, 2022, Sierra merged with Barings BDC Inc. at valuations reflecting the near-50 percent loss. Former Sierra shareholders escaped the vehicle but absorbed the losses permanently. Multiple securities law firms subsequently investigated potential suitability claims against the broker-dealers who recommended a non-traded BDC to investors for whom the illiquid, fee-heavy structure was inappropriate.

What Medley’s Bankruptcy Left Behind and Where Taube Is Now

On March 7, 2021, Medley LLC — the operating entity Taube co-managed — filed for Chapter 11 bankruptcy in Delaware with $5.4 million in assets against $140.8 million in liabilities. The largest creditors were retail investors who had purchased the baby bonds through brokerage accounts, trusting registration statements Taube had signed. By the April 30, 2021 claims bar date, creditors had filed claims totaling $133.3 million. On July 7, 2021, the NYSE suspended trading and delisted Medley Management, ticker MDLY, and both publicly traded note series, MDLX and MDLQ. Medley Management equity holders received zero recovery. As of the liquidating trust’s quarterly report for December 31, 2025, general unsecured creditors have received approximately $10.3 million on $128.7 million in allowed claims — an 8 percent recovery after four years of trust administration.

Taube resigned as CEO of Sierra Income Corporation on April 27, 2021 — seven weeks after the bankruptcy filing and ten days before the SEC issued Wells Notices on May 7, 2021. He resigned as co-CEO of Medley Management on May 3, 2021 but retained his co-chairman position on the board. He was not barred from serving as an officer or director of any company. As of April 2026, Taube operates as Managing Partner of Burnett Partners LLC, sits on the boards of PNC Proactive Northern Container LLC and Bennu Glass Inc., and serves as CEO of SIC Advisors LLC. He co-founded Progressive Therapeutics, a mental health treatment company. His Seth B. Taube Foundation, which focuses on mental health, climate technology, and education reform, anchors his public profile. Promotional materials describe him as a “successful entrepreneur, investor, business builder, musician, philanthropist, and father.” The SEC settlement, the Delaware court finding, and the 8 percent recovery for his bondholders receive no mention.

Conclusion

The $2 million civil penalty Seth Taube paid represents less than 2 percent of the $122.6 million raised from retail investors in the baby bond offerings alone — offerings built on an AUM figure he certified and the SEC found was overstated by over $1 billion. The cease-and-desist order is permanent. The censure is a permanent mark on his regulatory record. The bar that would have prevented him from running companies or sitting on boards was never imposed. His bondholders are receiving eight cents on the dollar after four years of trust administration. Taube is building new ventures and running a foundation dedicated to mental health and social impact, presenting a public narrative of entrepreneurship and philanthropy that has no room for the retail investors whose capital funded the credentials he now deploys.