Harbinger, Falcone To Seek Dismissal Of SEC Fraud Case

Oct 1 2012 | 6:44am ET

Harbinger Capital Partners founder Philip Falcone and his hedge fund will ask a court to junk the Securities and Exchange Commission's lawsuit against them.

Lawyers for the billionaire and New York-based Harbinger, as well as lawyers for former Harbinger executive Peter Jenson, told U.S. District Judge Paul Crotty on Friday that they intend to seek dismissal of the SEC's claims, The Wall Street Journal reports. The regulator is expected to oppose the request.

In June, the SEC sued Harbinger, Falcone and former Harbinger chief operating officer Peter Jenson, after the sides were unable to reach a settlement; Falcone reportedly balked at a proposed ban from the industry. The SEC accused Falcone and the hedge fund of defrauding investors in four ways, citing Falcone's loan from Harbinger to pay his taxes, alleged preferential redemption treatment for favored investors including Goldman Sachs, market manipulation and shorting into the deal. Harbinger and the SEC settled the final claim.

According to the Journal, the Harbinger respondents summarized their planned dismissal motion in the letters. Falcone has pledged a "vigorous" defense against the charges, and may point the finger at Jenson and two lawyers, who allegedly gave their consent to the $113 million loan. Harbinger has said that the loan was based on legal advice and that it was in the best interest of investors.

The SEC lawsuit is only onr of the issues that have hounded Falcone and Harbinger in recent years. The hedge fund has seen its assets dwindle due to difficulties faced by its largest investment, wireless Internet venture LightSquared, which Harbinger put into bankruptcy protection earlier this year. Harbinger lost 47% last year, and was down about 6% through July of this year—although it had been down in excess of 30%.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Future of Private Equity: New Opportunities, New Challenges

Feb 3 2017 | 6:41pm ET

The private equity industry’s astonishing rebound since the financial crisis has...

 

From the current issue of