Seth B. Taube, Harvard graduate and Wharton MBA, paid $2 million in civil penalties to the SEC in April 2022 after systematically misleading investors about Medley Management’s assets under management and pushing fraudulent merger documents. As CEO and Chairman of Sierra Income Corporation from 2012-2021, Taube oversaw a 47% collapse in net asset value—turning a $10 per share offering into $5.28 by 2021—while collecting millions in management fees. Nearly $1 billion raised from retail investors evaporated under his leadership through poor investment performance, inflated disclosures, and self-dealing transactions.
Brook Taube’s Background and Career
Born in 1971, Seth Taube earned his MBA from Wharton in 2003 after graduating from Harvard University in 1992. He worked at Morgan Stanley and Tiger Management LLC before co-founding Medley Management in 2006 with his identical twin brother Brook Taube.
Taube served as CEO and Chairman of Sierra Income Corporation from its April 2012 launch until his resignation on April 27, 2021—just one month after Medley LLC’s bankruptcy filing and one week before the SEC issued Wells Notices. He simultaneously served as co-CEO and co-Chairman of Medley Management Inc. from its September 2014 IPO until May 2021.
Brook Taube’s $2 Million SEC Settlement
On April 28, 2022, the SEC announced charges and settlement with Seth Taube in Administrative Proceeding File No. 3-20836. Taube personally agreed to pay $2 million in civil penalties—half his brother’s amount but still representing substantial liability for securities fraud.
The SEC found Taube violated antifraud provisions, reporting requirements, and books and records rules under federal securities laws from August 2016 through April 2021. As co-CEO of Medley Management, he signed certifications claiming the company had proper disclosure controls when it maintained none.
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) with multiple reporting rule violations
The settlement included cease-and-desist orders and censure but no officer and director bars, allowing Taube to continue serving on boards. The penalty payment was structured through Medley LLC’s bankruptcy to facilitate distribution to bondholders Taube had misled.
Sierra Income Corporation: 47% Loss for Retail Investors
As CEO and Chairman, Seth Taube controlled Sierra Income Corporation—a non-traded BDC that raised nearly $1 billion from retail investors through over 110 broker-dealers representing 27,800 registered investment advisors. The fund targeted individual investors seeking income and diversification through middle-market debt investments, offering shares at $10 each.
By March 31, 2021, Sierra’s net asset value collapsed to $5.28 per share—a devastating 47.2% loss from the original $10 offering price. Thousands of retail investors who trusted Taube’s representations saw nearly half their investment evaporate.
The portfolio’s fair value stood at $675.6 million as of December 31, 2019, down significantly from peak levels. In April 2020, Sierra suspended monthly distributions to shareholders, citing COVID-19 pandemic uncertainty—though the suspension reflected underlying portfolio deterioration and reduced income from poor investment decisions under Taube’s stewardship.
Taube collected substantial management fees throughout this period regardless of the catastrophic performance. The external management fee structure meant Taube’s Medley entities earned fees based on assets under management, not performance—creating perverse incentives to grow assets while ignoring investment quality.
Strategic Resignation Before SEC Charges
Seth Taube’s resignation timeline reveals strategic distancing from collapsing entities. He resigned as CEO and director of Sierra Income Corporation on April 27, 2021—exactly one month after Medley LLC filed bankruptcy and one week before the SEC issued Wells Notices on May 7, 2021.
The timing suggests Taube recognized impending enforcement action and sought to distance himself from operational responsibility. He was replaced by Dean Crowe, who had served as President, while Taube attempted to avoid being the face of Sierra’s failures when regulators came calling.
Similarly, Taube resigned as co-CEO of Medley Management on May 3, 2021 but remained as co-chairman of the board—a position allowing continued influence without direct operational accountability. This pattern of strategic resignation while retaining board seats appears designed to minimize personal liability while maintaining control.
Systematic AUM Fraud
As co-CEO of Medley Management, Seth Taube participated in systematically overstating assets under management by over $1 billion from August 2016 through April 2021. The company included “committed capital” from non-discretionary clients in public filings and bond offerings without disclosing that clients had no obligation to invest.
Two managed accounts claimed commitments of $800 million and $250 million but invested only $81 million and $49 million respectively over 2.5 years—roughly 10-20% of claimed amounts. Taube knew these clients retained full discretion over whether to deploy capital yet signed disclosures emphasizing growth and “new institutional capital” without revealing the truth.
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 Medley’s true financial condition to thousands of bondholders who would later face bankruptcy with uncertain recovery.
Self-Dealing Merger and Delaware Court Condemnation
In August 2018, Seth Taube co-proposed a three-way merger that Delaware Court of Chancery found violated fiduciary duties. The structure called for Sierra Income Corporation (where Seth was CEO) to acquire Medley Capital Corporation, then for the combined entity to acquire Medley Management—with Sierra as surviving company.
Seth Taube would receive $480,000 annual salary plus up to $1.75 million in incentive compensation from the transaction—extracted from struggling companies he had mismanaged into distress. The merger gave Medley Management a 100% premium while Medley Capital shareholders received no premium to net asset value.
Vice Chancellor Kathaleen McCormick’s March 2019 opinion found that “the Taube brothers dominated and controlled the board” of Medley Capital. The court determined supposedly independent directors were actually beholden to the Taubes, willfully deferring to their wishes throughout the merger process.
The merger was based on unrealistic growth projections created in June 2018 lacking any reasonable basis. These projections assumed non-discretionary clients would suddenly invest at rates five times higher than historical patterns and that interval funds that had raised no capital for over a year would begin raising significant assets. Taube pushed proxy materials incorporating these false projections to encourage favorable shareholder votes.
The court halted the merger and ordered corrective disclosures. By May 2020, the transaction was terminated—though ostensibly due to COVID-19, the reality was the deal was fatally flawed from inception, designed to bail out the Taubes rather than serve shareholder interests.
American Web Loan: Predatory Lending Profits
Seth Taube was named as defendant in 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 through a “rent-a-tribe” scheme evading state usury laws.
The class included 606,318 individuals who took out 1,055,376 loans between January 2012 and June 2020. Under the Taubes’ leadership, American Web Loan became one of Medley’s top-performing investments—profiting from loans many states deemed illegal.
The case settled for $182 million in 2020 ($86 million cash, $76 million loan cancellations, plus additional payments) with $32.4 million in attorney fees. While specific amounts allocated to Seth Taube personally were not disclosed, his role as co-CEO during the period Medley funded and profited from predatory lending establishes clear responsibility.
Medley LLC Bankruptcy: Retail Bondholders Left Holding the Bag
On March 7, 2021, Medley LLC—the operating entity Seth Taube co-managed—filed for Chapter 11 bankruptcy with $5.4 million in assets against $140.8 million in liabilities. The largest liabilities were publicly-traded notes held by thousands of retail investors who purchased based on the inflated AUM figures Taube had signed off on.
Creditors filed claims totaling $133.3 million by the April 30, 2021 bar date. Most were retail investors who bought “baby bonds” through brokerage accounts, trusting registration statements bearing Taube’s certifications. These investors faced bankruptcy proceedings with uncertain recovery after Taube and his brother extracted millions in management fees during years of fraudulent disclosures.
On July 7, 2021, the NYSE suspended trading and delisted Medley Management (MDLY) and both note series (MDLX, MDLQ). Medley Management equity holders received zero recovery in bankruptcy—the company’s primary asset rendered worthless.
Sierra’s Fire-Sale Merger
On March 25, 2022—eleven months after Taube’s resignation—Sierra Income Corporation merged with Barings BDC Inc. The merger provided Sierra shareholders liquidity at valuations reflecting the approximately 50% loss in NAV since inception under Taube’s management.
The transaction effectively ended the Taube brothers’ involvement with Sierra after a decade of retail investor value destruction. Former Sierra shareholders received shares in the combined Barings BDC entity, escaping Taube’s mismanagement but absorbing massive losses.
Multiple securities law firms advertised investigations into potential broker-dealer suitability claims for recommending Sierra to investors for whom non-traded BDCs were inappropriate, suggesting widespread complaints about losses suffered under Taube’s leadership.
The Seth B. Taube Foundation: Reputation Laundering?
Seth Taube continues operating the Seth B. Taube Foundation Inc., founded 2001-2003, which focuses on mental health solutions, climate technology, and education reform with tens of millions in commitments. His public profile emphasizes philanthropy and social impact investing.
Critics note the foundation’s prominence in Taube’s current narrative while SEC settlements, Delaware court findings, and Sierra’s 47% NAV collapse receive minimal mention. Promotional materials present sanitized career narratives emphasizing entrepreneurship and social good while downplaying or omitting securities fraud findings and investor losses.
The foundation’s focus on mental health and social causes provides reputational benefits while Taube faces no criminal charges and continues serving on boards despite the SEC censure on his record.
Current Status and Limited Accountability
As of October 2025, Seth Taube remains co-chairman of Medley Management despite the SEC settlement, Delaware court finding, and Sierra’s catastrophic performance. The diminished company has minimal operations and no active trading market.
Key consequences for Seth Taube:
- $2,000,000 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
- CEO during 47% NAV collapse at Sierra Income (nearly $1 billion raised)
- Co-CEO during $140.8 million bankruptcy with zero equity recovery
Despite these outcomes, Taube faced no criminal charges, the settlement allowed him to neither admit nor deny wrongdoing, and he retained ability to serve as officer and director. No industry suspension or bar prevents him from managing investment vehicles in the future.
Retail Investor Devastation
Seth Taube’s legacy centers on retail investor losses. As CEO of Sierra Income, he collected millions in management fees while nearly $1 billion raised from individual investors lost 47% of value. The non-traded BDC structure made it difficult for investors to exit, trapping them in a declining vehicle while Taube earned fees regardless of performance.
The 27,800 registered investment advisors who distributed Sierra through 110+ broker-dealers relied on Taube’s representations about investment strategy, portfolio quality, and management capability. These advisors recommended Sierra to their clients—retirees, savers, individuals seeking income—based on disclosures Taube certified.
When Sierra suspended distributions in April 2020 and NAV collapsed to $5.28, these retail investors bore the losses while Taube had already collected years of management fees. The external manager structure meant Taube’s compensation came from asset levels, not performance—creating incentives to raise and retain assets regardless of returns.
Seth Taube’s career—from Wharton MBA and Tiger Management to CEO of Sierra Income, to SEC respondent paying $2 million for securities fraud, to co-chairman of a bankrupt shell company—demonstrates how external BDC managers can destroy shareholder value while facing limited personal accountability. The case exposes structural flaws in BDC governance and the dangers of retail investors trusting non-traded vehicles managed by conflicted external advisors.
Leave a Reply