Tilton Drops Lawsuit Claiming SEC Hearings UnconstitutionalBy
Patriarch Partners founder sought to block Oct. 24 SEC hearing
SEC claims Tilton overcharged investors in loan securities
Lynn Tilton and her Patriarch Partners gave up trying to block an Oct. 24 U.S. Securities and Exchange Commission hearing into allegations that she overcharged investors in loan securities.
Tilton sued last month claiming SEC rules for such proceedings deprived her of the right to a fair process.
U.S. District Judge Ronnie Abrams questioned on Sept. 20 whether she had the authority to consider the case in light of a New York appeals court ruling that said Tilton’s constitutional challenge to the appointment process of SEC’s hearing officers must wait until the agency finishes its proceedings.
The SEC filed an administrative complaint against Tilton in 2015, accusing her of overcharging investors in $2.5 billion of collateralized loan obligations.
In the lawsuit dropped on Friday, Tilton claimed the speed of agency hearings and rules limiting defendants from gathering evidence are unfair, particularly in complex cases. New SEC rules improving the process were timed to ensure they wouldn’t apply to her and cases of others who have challenged SEC procedures in court, she said.
Earlier in the day, a lawyer for investment adviser Wing Chau tried to convince a three-judge panel of the New York appeals court that a lower court should hear his challenge to the SEC’s administrative proceeding against him. The judges didn’t immediately rule on the request.
Randy Mastro, Tilton’s lawyer, declined to comment on Friday’s court filing.
The case is Tilton v. Securities and Exchange Commission, 16-cv-07048, U.S. District Court, Southern District of New York (Manhattan).