The U.S. Securities and Exchange Commission has filed a lawsuit against Tricolor's former CEO and two other top executives at the subprime auto lender as the fallout over allegations that they misled investors continues to mount.
The details: The suit—filed in the U.S. District Court for the Southern District of New York—takes direct aim at former CEO Daniel Chu, Chief Financial Officer Jerome Kollar, and Senior Finance Director Ameryn Seibold for their roles in the alleged fraud scheme, detailing several key allegations.
The SEC claims that from 2020 through Tricolor's September 2025 bankruptcy, the company raised more than $1.9 billion through ABS offerings while portraying itself as financially sound despite significant liquidity problems.
The Commission also alleges that executives double-pledged loans while claiming they were free of other liens and manipulated loan metrics to make delinquent or defaulted loans appear current and eligible for securitization.
At the time of Tricolor's bankruptcy, more than $945 million in principal tied to the ABS offerings remained outstanding and payable to investors, according to the Commission.
The complaint seeks injunctive relief, disgorgement of ill-gotten gains with prejudgment interest and civil penalties against all defendants, as well as officer and director bars against Chu and Kollar.
What they’re saying: “We allege that these defendants defrauded investors based on bogus collateral and violated the integrity of our private credit markets,” said David Woodcock, Director of the SEC’s Division of Enforcement, per the official press release.
Why it matters: The SEC’s suit against Tricolor shows the depth of its collapse and underscores the risks in subprime auto finance, an important source of credit for dealers serving buyers with limited access to traditional financing.
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Between the lines: The SEC's suit is the latest fallout from the industry-rattling collapse of the subprime auto lender, which filed for Chapter 7 bankruptcy in September under a cloud of fraud investigations.
In December, the U.S. Attorney's Office for the Southern District of New York announced criminal charges against Chu, Kollar and Seibold.
Former Tricolor Chief Operating Officer David Goodgame pleaded guilty to fraud charges in July, according to court documents.
Bottom line: The expanding legal fallout from Tricolor's collapse highlights the potential consequences when controls break down in auto lending and securitization, reinforcing the importance of transparency and oversight as dealers and lenders work to maintain confidence in the subprime finance market.
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