On December 3, 2018, the SEC issued an order against Fifth Street Management, LLC, stating: "This matter arises from FSM's improper allocation of expenses to its former business development company ("BDC") clients, and failures relating to the valuation of two portfolio company investments held by one of the BDCs ("BDC-1")."

The SEC stated: "Fifth Street Management LLC, formerly an SEC-registered investment adviser based in Greenwich, Connecticut, has agreed to settle charges relating to the misallocation of certain expenses to its business development company clients and failing to reasonably conduct the quality control reviews of its business development company clients' quarterly valuation models, causing one client to materially overstate its net income."

The Commission stated: "Accordingly, for good cause shown, IT IS HEREBY ORDERED that the Division's request for an extension of time until November 29, 2019 to submit a Proposed Plan of Distribution is granted."

The SEC stated: "[I]t is hereby ORDERED, that Epiq is appointed as the fund administrator of the Fair Fund, pursuant to Rule 1105(a) of the Rules, 17 C.F.R. § 201.1105(a), and the administrator shall obtain a bond in the amount of $3,983,661.51, in accordance with Rule 1105(c) of the Rules, 17 C.F.R. § 201.1105(c)."

The SEC stated: "IT IS ORDERED that Miller Kaplan, pursuant to and in accordance with the Omnibus Order, is appointed the Tax Administrator for the QSF in the above-referenced proceeding"

The Commission stated: "The Fair Fund holds approximately $4 million, comprised of the disgorgement, prejudgment interest, and a civil money penalty paid by the Respondent, plus accrued interest. The Plan proposes to distribute the funds currently in the Fair Fund, less taxes, fees, and expenses, to compensate investors in the common stock of the BDC clients during the relevant period for the Respondent's misallocation of expenses."

The Commission stated: "This proposed Plan of Distribution ... provides for a distribution of the funds collected ... from Fifth Street Management, LLC ("Fifth Street") to compensate Fifth Street's former business development company (BDC) clients for the misallocation of expenses in 2013 and 2014."

The SEC stated: "[I]t is hereby ORDERED, pursuant to Rule 1104 of the Commission’s Rules on Fair Fund and Disgorgement Plans, that the Plan is approved, and posted simultaneously with this order on the Commission’s website at www.sec.gov."

The SEC stated: "[t]he Plan provides for a distribution of the funds collected in the above-referenced proceeding from Fifth Street Management, LLC ("Fifth Street") to compensate Fifth Street's former business development company ("BDC") clients for the misallocation of expenses in 2013 and 2014."

The Commission stated: "it is hereby ORDERED . . . that OFM pay the Fund Administrator’s current fees and expenses of $318,766.00 from the Fair Fund. Further, OFM is authorized to pay, at the direction of the Assistant Director of the Office of Distributions, any future fees and expenses of the Fund Administrator from the Fair Fund so long as the total amount paid to the Fund Administrator, including the invoice to be paid, does not exceed the total amount of the approved cost proposal submitted by the Fund Administrator."

The SEC stated: "it is hereby ORDERED that SEC staff shall transfer $573,350.57 from the Fair Fund to the Fair Fund's escrow account at The Huntington National Bank, and the Fund Administrator shall distribute such monies to the eligible claimants in accordance with the Plan."