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Despite defeating the U.S. Securities and Exchange Commission’s fraud allegations, financier Lynn Tilton can’t shake off a German bank’s $45 million lawsuit surrounding the Zohar investment funds she created, a New York judge said on Thursday, WSJ Pro Bankruptcy reported. Norddeutsche Landesbank Girozentrale, or Nord/LB, can proceed with its lawsuit accusing Tilton of using its money to buy equity stakes in troubled businesses instead of lending to them as she had pledged, according to the ruling issued by Judge Eileen Bransten of the New York State Supreme Court. Nord/LB is suing for more than $45 million it lost when it gave up on its investment in Ms. Tilton’s Zohar funds and dumped its holdings at a discount. Ms. Tilton created the three funds, dubbed Zohar I, II and III, as collateralized loan obligations to finance her collection of troubled businesses, selling notes to investors and using the proceeds to lend to the portfolio companies.

Mutual funds suffered redemptions of $56.2 billion in the week ended Dec. 19. That’s the biggest outflow since the week ended Oct. 15, 2008, according to data released yesterday by the Investment Company Institute, Bloomberg News reported. Yet even as investors were dumping mutual funds last week, they added $25.2 billion to exchange-traded funds. And a group of optimists — corporate insiders — have stepped up their buying over the past two months. The exit from funds came as stocks have plunged on fears of a slowing global economy and President Donald Trump’s criticism of Federal Reserve Chairman Jerome Powell. The S&P 500 index lost 5.4 percent in the week ended Dec. 19.

The biggest hedge funds are losing their shirts as analysts fear a major financial wipeout is imminent, the New York Post reported. From Ken Griffin’s Citadel, to Israel Englander’s Millennium Management, one big name after another is racking up negative returns lately, amid bad bets in a saturated market. Over 11,000 hedge funds manage in excess of $3 trillion in assets. And hundreds of funds could be gone by next year, say insiders. “Some sectors of the fund industry are crowded and competing with other investment vehicles,” said Nicholas Tsafos at EisnerAmper, who advises hedge funds. There’s also a wide disparity lately in returns among managers chasing similar investment strategies. “That alone should cause the number of closures to increase, as bad managers get fired and money is recirculated into those managers that do better,” said Don Steinbrugge, managing partner at Agecroft Partners, a hedge fund consulting and marketing firm.

Malaysian authorities on Monday filed criminal charges against Goldman Sachs Group Inc. units and a former partner of the bank in connection with the 1MDB financial scandal, the country’s attorney general said, the Wall Street Journal reported. Goldman Sachs International and two Asian subsidiaries of the Wall Street bank were charged under securities laws for the omission of material information and publishing of untrue statements in offering documents in 2012 and 2013 for the sale of international bonds by state investment fund 1Malaysia Development Bhd., or 1MDB. “We believe these charges are misdirected, will vigorously defend them and look forward to the opportunity to present our case. The firm continues to cooperate with all authorities investigating these matters,” Goldman said. Malaysia’s attorney general also filed charges against Tim Leissner, a former Goldman partner, under securities laws. Leissner pleaded guilty in criminal charges made public by the U.S. Justice Department in November to misappropriating 1MDB money and bribing officials in Malaysia and Abu Dhabi. His sentencing is expected early next year.

Bankruptcy lawyers unwinding the Woodbridge Group of Cos. Ponzi scheme say it will take until the first quarter of 2019 to get the first checks in the mail to burned investors, WSJ Pro Bankruptcy reported. The California company filed for chapter 11 protection about a year ago, with the Securities and Exchange Commission in hot pursuit. Weeks after the bankruptcy filing, Woodbridge and its founder, Robert Shapiro, were accused of civil fraud. Both eventually settled with the SEC, but the securities fraud accusations ended Shapiro’s influence in the bankruptcy case. Bankruptcy and real-estate professionals took over and are shutting down the company while collecting cash to pay off thousands of people, many of them elderly. Woodbridge investors were expecting to collect the first round of checks before the end of this year, partial repayment on hundreds of millions of dollars they plunged into what they were assured was a safe investment.

The chairman of the U.S. Securities and Exchange Commission (SEC) said on Thursday that the regulator will consider stricter rules for submitting shareholder proposals at annual meetings, including the ownership and resubmission threshold, Reuters reported. Jay Clayton, outlining the regulator’s agenda for 2019, said that the SEC would also consider subjecting proxy advisory firms to stricter requirements for transparency and conflict-of-interest disclosure. Last month, Reuters reported that the SEC was poised to consider changes to the rules that allow company shareholders to advance special resolutions on charged issues like climate change and gun violence. Industry groups say the rules allow special interests and proxy advisory firms that recommend how investors should vote to hijack corporate boardrooms with costly demands. The move could set up the SEC for a clash with investors, who worry any rule changes would diminish their ability to hold company management accountable.

A U.S. bank regulator believes that banks should be increasingly aware of activity in the leveraged lending market, cautioning rapid growth in that sector by nonbanks could pose future risks to the financial sector, Reuters reported. The U.S. Office of the Comptroller of the Currency (OCC) highlighted loans to highly-indebted companies in its semiannual risk report issued yesterday. While lending by banks in that sector does not seem exceedingly risky, the OCC cautioned near-record issuance in that sector, driven by nonbanks like private equity firms and hedge funds, merits closer attention. Leveraged lending has attracted some attention in Washington of late. Sen. Elizabeth Warren (D-Mass.) pressed regulators earlier this month about underwriting standards in that market. The Federal Reserve is also hearing more from concerned parties about the leveraged loan market and how it could complicate future economic downturns.

Two big private debt funds raised this week by Crescent Capital Group LP and Monroe Capital LLC are both layering debt on top of the money raised from institutional investors to increase returns, WSJ Pro Bankruptcy reported. Los Angeles-based Crescent Capital and Chicago-based Monroe Capital, both credit investment firms, announced raising a total of nearly $3 billion in capital from investors. However, the funds said they would borrow an additional $1.7 billion to expand the size of the funds. The practice of expanding a fund’s size by borrowing has been around for years, but it has gained steam in recent years as big commercial banks have gotten more comfortable with lending to private debt funds, said Theodore Koenig, chief executive officer of Monroe Capital.