In the Matter of Chatham Asset Management, LLC, et al.

Admin. Proc. File No. 3-21355

On April 3, 2023, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Chatham Asset Management, LLC and Anthony Melchiorre (collectively, the “Respondents”). In the Order, the Commission found that Chatham and Melchiorre traded on behalf of their fund clients in three high-yield debt securities issued by American Media Inc. (“AMI”), a wholly-owned subsidiary of AMI Parent Holdings, LLC (“AMI Parent”). At times, from 2016 through 2018, Chatham and Melchiorre engaged in transactions in these AMI debt securities (the “AMI Bonds”) that resulted in one Chatham fund selling AMI Bonds and a different Chatham fund purchasing the same AMI Bonds, through various broker-dealers (the “Rebalancing Trades”). Chatham engaged in the Rebalancing Trades to address portfolio constraints such as industry or issuer fund concentration limits, to meet investor redemptions, and to allocate capital inflows and outflows. These trades were executed at prices Chatham and Melchiorre proposed.

Over time, the prices at which Chatham and Melchiorre traded the securities in the Rebalancing Trades increased at a significantly higher rate than the prices of similar securities. Chatham’s and Melchiorre’s trading in the AMI Bonds accounted for the vast majority of the trading in those Bonds and therefore over time had a material effect on their pricing.

Chatham and Melchiorre calculated the net asset values (“NAVs”) of their client funds’ holdings using pricing data that was based, in part, on the trading prices of the securities. As a result, during the relevant time period, the NAVs of Chatham’s Clients were higher than they would have been if Chatham’s Rebalancing Trades were removed from the market for the AMI Bonds, which, in turn, resulted in higher fees being charged to the clients than would have been charged if Chatham’s Rebalancing Trades were removed from the market. The Commission ordered the Respondents to pay $11,000,000.00 in disgorgement, $3,375,072.00 in prejudgment interest, and $5,000,000.00 in civil money penalties, for a total of $19,375,072.00, to the Commission. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties collected, along with the disgorgement and interest collected, could be distributed to harmed investors (the “Fair Fund”). See the Commission’s Order: Release No. 6270

The Fair Fund consists of the $13,907,764.12 collected from the Respondents, and any additional funds collected from the Respondent, pursuant to the Order, will be added to the Fair Fund. The Fair Fund has been deposited in a Commission-designated account at the U.S. Department of the Treasury, and any accrued interest will be added to the Fair Fund.

On April 3, 2024, the Commission issued an order appointing Heffler, Radetich & Saitta, LLP, as the Tax Administrator of the Fair Fund. See the Commission’s Order:  Release No. 34-99895.

On March 13, 2025, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provided the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice:  Release No. 34-102666 and the Proposed Plan.

On May 9, 2025, the Commission issued an order approving the Proposed Plan and simultaneously posted the approved plan of distribution (the “Plan”).  See the Commission’s Order:  Release No. 34-103021 and the Plan.

The Plan provides that the distribution of the Net Available Fair Fund shall be made to investors in five funds—Chatham Asset High Yield Master Fund, Ltd.; Chatham Asset Private Debt and Strategic Capital Fund, LP; Chatham Fund, LP; Chatham Everest Fund, L.P.; and Chatham Eureka Fund, LP—who paid excess performance (aka incentive) fees and management fees to Chatham Asset Management, LLC from January 2016 through December 2018, inclusive and incurred losses due to the Respondents’ violations as described in the Order.

For more information, please contact the Commission:

Office of Distributions
Email: ENFOfficeofDistributions@sec.gov