SEC Charges Ex-Tricolor Executives in $1.9 Billion ABS Collapse
SEC charges three former Tricolor executives over alleged double pledging tied to $1.9 billion of ABS issuance and $945 million outstanding at bankruptcy.
Summary
On August 18, 2026, the SEC sued former Tricolor Holdings LLC CEO Daniel Chu, CFO Jerome Kollar and Senior Director of Finance Ameryn Seibold in the Southern District of New York, case No. 26-civ-7041. The complaint alleges that, from at least 2020 until the Texas subprime auto lender’s September 2025 bankruptcy, they helped double pledge hundreds of millions of dollars of auto loans to multiple lenders and asset-backed securities offerings. Tricolor raised more than $1.9 billion through ABS while Chu and Kollar allegedly portrayed it as financially sound despite severe liquidity constraints. Offering materials and meetings allegedly described collateral loans as lien-free, while defendants manipulated loan metrics so nonpaying or defaulted accounts appeared current and securitization-eligible. More than $945 million of ABS principal remained payable at bankruptcy.
The SEC charged all three defendants under antifraud provisions of the Securities Act of 1933 and Exchange Act of 1934, with Chu also facing Section 20(a) control-person liability. It seeks injunctions, disgorgement with prejudgment interest and civil penalties against all three, plus officer and director bars against Chu and Kollar. The U.S. Attorney’s Office for the Southern District of New York announced parallel criminal charges in December 2025. The ongoing SEC investigation is conducted by George Carotenuto, Thomas Keltner and Zachary Sturges, supervised by Armita Cohen and Eric Werner; Abigail Rosen leads the litigation under Alexander Vasilescu. The FBI and FDIC Office of Inspector General assisted.
Positives
- The SEC seeks disgorgement with prejudgment interest, civil penalties and injunctions against all three former Tricolor executives.
- Officer and director bars sought against Daniel Chu and Jerome Kollar could restrict their future leadership roles at public companies.
- December 2025 parallel criminal charges and assistance from the FBI and FDIC Office of Inspector General show coordinated enforcement.
- The SEC investigation remains ongoing under its Complex Financial Instruments Unit.
Risks & concerns
- More than $945 million of ABS principal remained outstanding and payable when Tricolor entered bankruptcy in September 2025.
- Hundreds of millions of dollars of subprime auto loans were allegedly pledged simultaneously to multiple ABS offerings and lenders.
- From at least 2020, Tricolor allegedly raised over $1.9 billion while concealing significant liquidity constraints and operating-funding difficulties.
- Loan metrics were allegedly manipulated to make nonpaying or defaulted loans appear current and eligible for securitization pools.
- Chu, Kollar and Seibold face SEC antifraud claims and parallel federal criminal charges announced in December 2025.
