If you invested in the common stock of Fifth Street Management, LLC’s (“Fifth Street” or the “Respondent”) former business development company (“BDC”) clients: Fifth Street Finance Corp. (“FSC”) and Fifth Street Senior Floating Rate Corp. (“FSFR”) (collectively, the “BDC Clients”) and held common stock of FSC during the period April 1, 2013 through December 31, 2014, inclusive, and/or held common stock of FSFR during the period September 1, 2013 through December 31, 2014, inclusive (the “Investment Period”), and suffered a loss according to the Plan of Distribution approved by the Securities and Exchange Commission (the “Plan”), you may be entitled to a Distribution Payment from the Fifth Street Fair Fund.
On December 3, 2018, the Securities and Exchange Commission (the “Commission”) issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Section 21C of the Securities Exchange Act of 1934, Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, and Section 9(f) of the Investment Company Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (the “Order”) against Fifth Street. The Commission determined, in relevant part, that, in 2013 and 2014, Fifth Street improperly allocated to Fifth Street’s former BDC clients rent and other overhead expenses, and certain compensation expenses that Fifth Street should have paid. The Commission ordered Fifth Street to pay disgorgement of $1,999,115.86, prejudgment interest of $334,545.65, and a civil money penalty of $1,650,000, and created a Fair Fund pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002 for the ordered monetary relief (the “Fair Fund” or “Fifth Street Fair Fund”). Fifth Street has since paid in full, and the Fair Fund currently holds approximately $4 million, comprised of disgorgement, prejudgment interest, civil money penalty, and accrued interest.
By Order dated April 18, 2019, the Commission appointed Epiq Class Action & Claims Solutions, Inc. (“Epiq”) as the Fund Administrator for the Fair Fund (the “Fund Administrator”), responsible for administering the Fair Fund in accordance with the distribution plan discussed below.
By Order dated August 1, 2019, the Commission approved the
Plan, pursuant to which the Fifth Street Fair Fund will be used to compensate Eligible Claimants 1 for the Respondent’s misallocation of expenses during the Investment Period.
If you held common stock of Fifth Street Finance Corp. during the period April 1, 2013 through December 31, 2014, inclusive and/or held common stock of Fifth Street Senior Floating Rate Corp. during the period September 1, 2013 through December 31, 2014, inclusive; are not an Excluded Party as defined in the Plan; and suffered a loss according to the Plan, you may be eligible for a Distribution Payment from the Fifth Street Fair Fund. Eligibility will be determined by the Fund Administrator in accordance with the Plan. Distribution Payments will be subject to a $10.00 Minimum Distribution Amount.
Excluded Parties are defined as: Fifth Street Management, LLC, its affiliates, assigns, subsidiaries, successors-in-interest, and any firm, trust, corporation, or other entity in which Fifth Street has or had a controlling interest during the Investment Period, and the Fund Administrator (Epiq), its employees, and those persons assisting the Fund Administrator in its role as Fund Administrator.
If you did not complete and timely submit a Claim Form, you will not be considered for eligibility to receive a Distribution Payment under the Plan of Distribution.
Please note that the deadline to file a claim for this matter has passed.
Important Dates and Deadlines
Fifth Street Finance Corp. (“FSR”) during the period April 1, 2013 through December 31, 2014, inclusive.
Fifth Street Senior Floating Rate Corp. (“FSFR”) during the period September 1, 2013 through December 31, 2014, inclusive.
Postmarked or, if not sent by U.S. Mail, received on or before
November 29, 2019
1 Capitalized terms herein not otherwise defined are defined in the Plan.