NEW YORK, April 1 (Reuters) - The flamboyant New York financier Lynn Tilton and her firm Patriarch Partners LLC on Wednesday sued the U.S. Securities and Exchange Commission to stop the regulator from pursuing a case accusing them of defrauding their investors.
In a complaint filed on Wednesday in Manhattan federal court, Tilton said the SEC violated the U.S. Constitution by bringing its case through an in-house administrative proceeding, rather than in federal court where defendants have additional rights.
The SEC alleged that Tilton and Patriarch breached their duties to clients by hiding the poor performance of assets underlying three collateralized loan obligation funds, enabling them to collect almost $200 million of fees to which they were not entitled.
(Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama)