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SEC fraud case against investor Lynn Tilton dismissed

  • Tilton has been battling the two-year-old administrative law case in which the SEC accused her of misleading investors and collecting $200 million in extra fees.
  • The U.S. Supreme Court denied Tilton's petition for a hearing in May.

The Securities and Exchange Commission's fraud case against investor Lynn Tilton was dismissed, CNBC has confirmed.

Tilton has been fighting a two-year-old SEC administrative case that accused her of misleading investors about the value of loan pools, and collecting $200 million in extra management fees. Tilton's firm, Patriarch Partners, invested in distressed private equity assets, including loans. The case concerned $2.5 billion of loan pools.

The SEC's enforcement division had no comment for CNBC on Wednesday, after the decision by an administrative law judge to dismiss the case. In the decision, the judge said the violations the SEC alleged were "unproven."

"She's been totally vindicated," said Tilton's lawyer, Randy Mastro of Gibson Dunn & Crutcher. "Her reputation has been restored and justice has been done."

There was a hearing last November in the proceeding, but Tilton has been fighting the SEC's internal process as unfair to defendants. She took her arguments to the U.S. Supreme Court, trying to get her case moved to federal court, but the high court denied her petition in May.

In a statement Wednesday, Tilton said, "I am heartened to finally be able to put to rest the rumors and innuendo that have cast a dark shadow on me and my business for so long. Throughout this ordeal, I have worked hard to ensure that my focus on my companies did not waver; without this meritless lawsuit hanging over our heads, however, we can now redouble our efforts to lead the portfolio companies toward growth and prosperity."

-- Robert Frank contributed to this report