SEC Charges Chatham Asset Management and Anthony Melchiorre Over Improper Trading of Fixed Income Securities

The Securities and Exchange Commission has accused Chatham Asset Management LLC and its founder Anthony Melchiorre of improper trading of fixed income securities. Chatham and Melchiorre have agreed to pay a combined $19.3 million in disgorgement, interest and civil penalties to resolve the charges. According to the SEC's order, from 2016 to 2018, one Chatham-advised client sold certain American Media, Inc. bonds while another purchased them through broker-dealers. Chatham and Melchiorre allegedly manipulated the prices of these transactions to increase their demand and prices significantly above similar securities, while using pricing data that increased the funds' NAVs. As a result, the clients paid higher fees. Chatham and Melchiorre have consented to the SEC's order without admitting or denying its findings, and must pay disgorgement and interest of $11 million and civil penalties of $4.9 million and $600,000, respectively. They are also prohibited from serving in certain positions in the investment industry.