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Home » Medley Management Inc. (NYSE: MDLY) – Investor Alert – UPDATED

Medley Management Inc. (NYSE: MDLY) – Investor Alert – UPDATED

Medley Management Inc. (NYSE: MDLY)

Did you lose money investing in Medley Management Inc. (NYSE: MDLY)?

Galvin Legal, PLLC is launching an investigation on behalf of investors who suffered losses investing in Medley Management Inc. (NYSE: MDLY) at the recommendation of their financial advisor. If you suffered losses investing in Medley Management Inc. (NYSE: MDLY), then Galvin Legal, PLLC may be able to help you recover your losses in a Financial Industry Regulatory Authority (“FINRA“) arbitration claim against the brokerage firm that recommended the investment.

If you suffered losses investing in Medley Management Inc. (NYSE: MDLY) and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.

UPDATE 5/6/2020: The board of Sierra Income Corporation has terminated its previously announced mergers with Medley Capital Corporation (NYSE: MCC), a publicly traded BDC, and Medley Management Inc. (NYSE: MDLY), an affiliated alternative asset management firm. Sierra Income Corporation planned to merge with Medley Capital Corporation (NYSE: MCC) and then acquire Medley Management Inc. (NYSE: MDLY), with Sierra Income Corporation being the surviving company that would be structured as a publicly-traded BDC. Medley Capital Corporation (NYSE: MCC) and Sierra Income Corporation are both controlled by Medley Management Inc. (NYSE: MDLY). According to the merger agreements, the companies were permitted to terminate the respective agreement if the merger had not been consummated on or before March 31, 2020. In determining to terminate the agreement, Sierra Income Corporation noted that it considered a number of factors, including changes in the relative valuations of the companies, the changed circumstances and the unpredictable economic conditions resulting from the global health crisis caused by the coronavirus (COVID-19) pandemic, and the uncertainty regarding the parties’ ability to satisfy the conditions to closing in a timely manner. Last year, the companies were ordered to amend their merger agreements after the Delaware Court of Chancery ruled that Medley Capital Corporation’s (NYSE: MCC) directors breached their fiduciary duties in entering into the proposed merger and halted the vote until investors were provided with corrective disclosures on the deal.

If you suffered losses investing in Medley Management Inc. (NYSE: MDLY) and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.

UPDATE 4/27/2020: According to reports on April 23, 2020, Medley Management Inc. (NYSE: MDLY), the publicly traded manager of Sierra Income Corporation and Medley Capital Corporation (NYSE: MCC), announced that it had received written notice from the New York Stock Exchange that its average market capitalization over a consecutive 30-day trading period was less than $50 million at the same time that its stockholders’ equity is less than $50 million, in addition to is common stock closing price trading below $1.00 per share for 30 consecutive trading days, such infractions if not cured will result in a delisting of the stock from the NYSE. Medley Management Inc. (NYSE: MDLY) reportedly has ten business days to provide a written response to the NYSE regarding its plans to repair these deficiencies. Medley Management Inc. (NYSE: MDLY) reportedly has publicly traded notes that are trading at significant discounts to their par value. Medley Capital Corporation (NYSE: MCC) has also reportedly received a notice from the New York Stock Exchange that its average daily common stock closing price was below $1.00 per share for 30 consecutive trading days, and was out of compliance with NYSE’s continued listing standard rules. According to reports, Medley Capital Corporation (NYSE: MCC) notified the NYSE that it intends to cure the non-compliance through a reverse stock split. Medley Capital Corporation (NYSE: MCC) noted that it will propose a reverse stock split to its stockholders for approval at its 2020 annual meeting. Medley Capital Corporation (NYSE: MCC) has six months to regain compliance with the minimum share price requirements or it will not be permitted to be listed on the NYSE. Medley Capital Corporation (NYSE: MCC) and Medley Management Inc. (NYSE: MDLY) are parties to a proposed merger with Sierra Income Corp. first announced in August 2018, and amended in July 2019. According to FactRight, an alternative investment due diligence firm, “there is no indication that the consideration related to the proposed mergers of Sierra Income Corp., Medley Capital Corporation (NYSE: MCC), and Medley Management Inc. (NYSE: MDLY) will be adjusted in light of recent market volatility. Medley Capital Corporation (NYSE: MCC) shares closed at $2.76 on July 29, 2019 (the date of the amended merger agreement announcement) and closed at $0.59 on April 16, 2020. Similarly, Medley Management Inc. (NYSE: MDLY) shares closed at $3.12 on July 29, 2019, and closed at $0.52 on April 23, 2020.”

If you suffered losses investing in Medley Management Inc. (NYSE: MDLY) and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.

What is a Business Development Company (BDC)?

A Business Development Company (BDC) is typically a publicly traded company that is similar to closed-end investment funds. They generally invest in small and mid-sized companies that are either developing or that are financially distressed.

BDCs were created in 1980 through a Congressional amendment to the Investment Company Act of 1940. One of the primary differences between a BDC and a venture capital fund is that BDCs typically allow non-accredited investors to invest.

The Investment Company Act of 1940 sets out several requirements for BDC. For example, BDC are required to be a domestic company and must be registered with the SEC. They must maintain at least 70% of their assets in U.S. firms with market values of less than $250 million and must distribute over 90% of their profits.

If you suffered losses investing in Medley Management Inc. (NYSE: MDLY) and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.

Due Diligence Requirement

FINRA requires brokerage firms to conduct due diligence on investments, such as Medley Management Inc. (NYSE: MDLY), and to conduct a suitability analysis when recommending securities to a customer that takes into account the customer’s knowledge and experience. FINRA Rule 2111(a) states that “a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”

Brokerage firms that fail to conduct adequate due diligence on investments they recommend, such as Medley Management Inc. (NYSE: MDLY), or that make unsuitable recommendations can be held responsible for the customer’s losses in a FINRA arbitration claim.

Rule 2111 is composed of three main obligations: reasonable-basis suitability, customer-specific suitability, and quantitative suitability.

(a) The reasonable-basis obligation requires a member or associated person to have a reasonable basis to believe, based on reasonable diligence, that the recommendation is suitable for at least some investors. In general, what constitutes reasonable diligence will vary depending on, among other things, the complexity of and risks associated with the security or investment strategy and the member’s or associated person’s familiarity with the security or investment strategy. A member’s or associated person’s reasonable diligence must provide the member or associated person with an understanding of the potential risks and rewards associated with the recommended security or strategy. The lack of such an understanding when recommending a security or strategy violates the suitability rule. Thus, brokerage firms had a duty to determine whether Medley Management Inc. (NYSE: MDLY) was suitable for at least some investors.
(b) The customer-specific obligation requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile, as delineated in Rule 2111(a).
(c) Quantitative suitability requires a member or associated person who has actual or de facto control over a customer account to have a reasonable basis for believing that a series of recommended transactions, even if suitable when viewed in isolation, are not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile, as delineated in Rule 2111(a). No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.

If you suffered losses investing in Medley Management Inc. (NYSE: MDLY) and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.

CONTACT OUR SECURITIES FRAUD ATTORNEYS

If you suffered losses investing in Medley Management Inc. (NYSE: MDLY) and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.

This information is all publicly available and is being provided to you by Galvin Legal, PLLC.

Galvin Legal, PLLC is a national securities arbitration, securities mediation, securities litigation, securities fraud, securities regulation and compliance, and investor protection law practice. For more information on Galvin Legal and its representation of investors, please visit www.galvinlegal.com or call 1-800-405-5117.

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