Brook B. Taube, Harvard graduate and co-founder of Medley Management, personally paid $4 million in civil penalties to the SEC in April 2022 after systematically misleading investors, inflating assets under management by over $1 billion, and pushing a self-dealing merger that a Delaware court found violated fiduciary duties.
As co-CEO and Chairman of multiple publicly-traded investment vehicles, Taube presided over one of the worst-performing Business Development Companies in the industry, ultimately destroying hundreds of millions in shareholder value through poor investment decisions, governance failures, and fraudulent disclosures.
Brook Taube Background and Career
Born in 1971, Brook Taube earned his CFA designation and began his career at Bankers Trust Corporation in leveraged finance before becoming a partner at Griphon Capital Management. He co-founded Medley Management in 2006 with his identical twin brother Seth Taube, building a credit-focused alternative asset management firm.
Taube served as CEO and Chairman of Medley Capital Corporation from its January 2011 IPO through 2021, and as co-CEO and co-Chairman of Medley Management Inc. from its September 2014 IPO until his resignation as co-CEO in May 2021. Despite resigning as CEO amid SEC investigation, he remains co-chairman of Medley Management’s board as of October 2025.
Brook Taube’s $4 Million SEC Settlement
On April 28, 2022, the SEC announced charges and settlement with Brook Taube in Administrative Proceeding File No. 3-20836. Taube personally agreed to pay $4 million in civil penalties—matching his brother’s contribution and representing the second-largest individual penalty in the case.
The SEC found Taube violated multiple antifraud provisions under federal securities laws from August 2016 through April 2021. As co-CEO, he signed certifications claiming Medley had evaluated disclosure controls and procedures, when the company maintained no policies, controls, or procedures to ensure accurate disclosures as required by Exchange Act Rule 13a-15(a).
Specifically, the SEC order cited violations of:
- Securities Act Sections 17(a)(2) and 17(a)(3)
- Investment Advisers Act Sections 206(2) and 206(4)
- Exchange Act Section 14(a) and Rule 14a-9 (proxy violations)
- Exchange Act Section 13(a) reporting requirements
The settlement included cease-and-desist orders and censure but no officer and director bars, allowing Taube to continue serving on public company boards despite findings of multi-year securities fraud.
Systematic Inflation of Assets Under Management
As co-CEO, Brook Taube oversaw the systematic misrepresentation of Medley’s assets under management in public filings, bond offerings, and quarterly reports. Medley included over $1 billion in “committed capital” from non-discretionary clients who had no obligation to invest.
Two separate managed accounts claimed commitments of $800 million and $250 million. Yet these clients invested only $81 million and $49 million respectively over 2.5 years—roughly 10% and 20% of claimed commitments. These clients retained full discretion over whether to deploy capital and could invest through other managers, yet Medley’s disclosures emphasized “new institutional capital” and growth without revealing that most would never be invested.
This fraud infected four “baby bond” offerings between August 2016 and February 2017 that raised $122.6 million from retail investors. Taube signed registration statements featuring inflated AUM figures, misrepresenting the company’s true financial condition to thousands of individual bondholders who would later face bankruptcy proceedings.
Delaware Court: “Dominated and Controlled the Board”
In March 2019, Delaware Court of Chancery Vice Chancellor Kathaleen McCormick issued a scathing opinion finding that Brook Taube and his brother breached fiduciary duties to Medley Capital shareholders through their push for a self-dealing merger.
The court found: “The Taube brothers dominated and controlled the board” of Medley Capital despite supposedly independent directors. Brook Taube inappropriately communicated with directors throughout the supposedly independent evaluation process, undermining the integrity of the special committee formed to protect shareholder interests.
In August 2018, Taube proposed a three-way merger giving Medley Management a 100% premium while Medley Capital shareholders received no premium. Most egregiously, Brook Taube would receive $600,000 annual salary plus up to $3.2 million in incentive compensation from the transaction—compensation extracted from the struggling company he had mismanaged.
Text messages exposed in court revealed the true dynamics. When a shareholder criticized the merger, an “independent” director texted Brook Taube: “Are we going to respond to every f**ksake on the planet?” The messages showed directors were not independent but rather beholden to the Taubes, routinely deferring to their wishes.
The court noted that every major credit manager who reviewed Medley in 2017 declined to make an offer—a damning indictment of the company’s true condition. Rather than accept this market verdict, Taube pushed a self-serving merger to bail himself out while destroying shareholder value.
Worst-in-Industry Performance
As Chairman and CEO of Medley Capital Corporation, Brook Taube presided over what Wells Fargo analysts described as “one of the worst records” in the BDC industry.
On October 30, 2019, Institutional Investor published an exposé documenting Medley Capital’s bottom-quartile annual return on equity and consistent underperformance relative to peers. Under Taube’s leadership, portfolio company distress rates exceeded industry norms, non-accrual loans reached concerning levels, and distributable income to shareholders declined.
Investors who bought Medley Capital at the January 2011 IPO at $12 per share suffered catastrophic losses under Taube’s stewardship. The company (now PhenixFIN) traded well below IPO price in subsequent years, representing massive shareholder value destruction.
Medley Management stock priced at $18 in the September 2014 IPO declined to $5.88 by delisting in July 2021—a 67% loss from an already-disappointing IPO price that came in below the expected $20-$22 range.
Concentrated Control and Governance Failures
Brook Taube structured Medley Management’s September 2014 IPO to retain 97.5% of voting control through a dual-class share structure. Despite taking the company public and raising $108 million from outside investors, Taube and his brother owned approximately 97.7% of voting interests.
This concentrated control enabled the governance failures that followed. With near-total voting power, the Taubes faced no meaningful accountability from shareholders, could appoint compliant directors, and could push self-interested transactions without genuine independent oversight.
The concentration of control became particularly problematic given Medley’s external management structure. As external managers of Medley Capital Corporation, the Taubes collected management and incentive fees regardless of performance while facing inherent conflicts between their interests and those of the BDC’s shareholders—conflicts that came to fruition in the attempted merger.
American Web Loan: Predatory Lending
Brook Taube was named as a defendant in the massive Solomon v. American Web Loan RICO class action (Case No. 4:17-cv-00145, E.D. Va.) involving alleged predatory lending. Plaintiffs claimed Medley provided $23 million to extend loans with interest rates exceeding 500% APR, evading state usury laws through a “rent-a-tribe” scheme.
The class included 606,318 individuals who took out 1,055,376 loans. The case settled for $182 million in 2020 ($86 million cash, $76 million loan cancellations, plus additional payments), though specific amounts allocated to Taube personally were not disclosed. American Web Loan reportedly became one of Medley’s top-performing investments under Taube’s oversight—profiting from loans many states deemed illegal.
Bankruptcy and Financial Collapse
On March 7, 2021, Medley LLC—the core operating entity Taube co-managed—filed for Chapter 11 bankruptcy with $5.4 million in assets against $140.8 million in liabilities. The bankruptcy came after the company missed quarterly interest payments on publicly-traded notes, triggering defaults.
Assets under management collapsed from over $5 billion at peak to $1.3 billion by bankruptcy. Revenue in 2020 was just $31.7 million—insufficient to service debt obligations. Creditors filed claims totaling $133.3 million, primarily from retail investors who bought the “baby bonds” based on the inflated AUM figures Taube had certified.
On July 7, 2021, the NYSE suspended trading and delisted Medley Management (MDLY) and both note series (MDLX, MDLQ), with NYSE Regulation finding the companies “no longer suitable for listing.” Medley Management’s equity holders—including public shareholders who invested based on Taube’s representations—received zero recovery in the bankruptcy.
May 2021 Resignation and Wells Notice
On May 3, 2021—one month after the bankruptcy filing—Brook Taube resigned as co-CEO of Medley Management but remained as co-chairman of the board. Four days later, on May 7, 2021, the SEC issued Wells Notices to Taube and other Medley entities indicating intent to bring enforcement charges.
The timing suggests strategic resignation to distance himself from operational responsibility while retaining board influence. The Wells Notice proposed potential violations including Section 10(b) fraud, Securities Act antifraud provisions, Investment Advisers Act violations, proxy violations, and reporting violations, with potential remedies including officer and director bars.
Ultimately, the April 2022 settlement did not include officer and director bars, allowing Taube to continue serving on public company boards—a lenient outcome given findings of multi-year securities fraud spanning five years.
Current Status and Reputation
As of October 2025, Brook Taube remains co-chairman of Medley Management despite the SEC settlement, Delaware court finding of fiduciary breach, and bankruptcy. The diminished company has minimal operations and no active trading market.
Taube reportedly remains active in investment activities through new ventures, with promotional materials emphasizing entrepreneurship while minimizing or omitting discussion of the SEC settlement, Delaware court ruling, and $140.8 million bankruptcy.
Key consequences for Brook Taube:
- $4,000,000 personal SEC penalty
- Permanent censure on regulatory record
- Cease-and-desist order against future violations
- Delaware court finding of fiduciary duty breach
- RICO defendant in $182 million predatory lending settlement
- Presided over 67% loss in Medley Management stock value
- Chairman during $140.8 million bankruptcy with zero equity recovery
Despite these outcomes, Taube faced no criminal charges, settlement allowed him to neither admit nor deny wrongdoing, and he retained ability to serve as officer and director of public companies. The case represents how concentrated control, inadequate governance, and inflated metrics can destroy shareholder value while principals face limited personal accountability beyond civil penalties.
Brook Taube’s career arc—from Harvard graduate and CFA to CEO of publicly-traded investment companies, to SEC respondent paying $4 million for securities fraud, to chairman of a bankrupt shell company—serves as a cautionary tale about the dangers of concentrated control and self-dealing in the asset management industry.
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