That wild and crazy Lynn Tilton and her wild and crazy CLOs (Collateralized loan obligation)

Lynn Tilton (Horasis Annual Meeting 2011) 002
Distressed Diva Tilton Has More Than Just the SEC to Worry About


At the heart of the SEC’s case is how Tilton valued the loans to companies she or Patriarch controlled that were later bundled into CLOs and sliced up into securities of varying risks. The SEC says some of the loans should have been written down -- and the fees charged investors to manage the CLOs lowered -- since many of the companies made no interest payments, or only partial payments. It’s not typical for loans backing a CLO to be made to companies run by the same operator. It’s also rare for that operator to also manage the CLO. “It’s highly unusual to have a CLO that’s concentrated in any one owner,” said Lawrence Golub, the chief executive officer of lender Golub Capital Partners in New York. “It’s like having a beauty pageant and the judges are the parents of the contestants.
Comment: Her wild and crazy Christmas card (mentioned in the article). What is a Collateralized loan obligation? More on Lynn Tilton.Related: Imagine a butcher making sausages. Lesson 1: If the ingredients are toxic ... so will be the final product. Lesson 2: Don't invest in what you don't understand.


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