Wednesday, 27 August 2014
Last updated 4 hours ago
May 9 2013 | 2:02pm ET
Harbinger Capital Management and its founder, Philip Falcone, have struck a deal with the Securities and Exchange Commission that will see Falcone barred from the securities industry—but with enough caveats to allow him to continue to run the hedge fund and its permanent capital vehicle.
Under the agreement in principle, Harbinger and Falcone will pay $18 million to settle fraud charges; Falcone himself will cover $4 million of the total. And Falcone accepted the industry ban he's fought for months.
But the SEC made major concessions, as well. The most important is that the temporary ban amounts primarily to a prohibition on raising new capital for the two years—an unlikely enough event in any case, given Harbinger's troubles in recent years. The bar does not cover Harbinger's nine investment advisers, and Falcone will be permitted to continue to run the firm, as well as remain chairman and CEO of the publicly-traded permanent capital vehicle, Harbinger Group, although he cannot be involved in making new acquisitions. In addition, Harbinger Capital will get a monitor to ensure that it is complying with the settlement, which still requires the approval of the SEC's commissioners and a court.
The SEC also did not include a standard injunction against further fraud violations, although the deal does allow Harbinger and Falcone to settle without admitting or denying wrongdoing.
Falcone and Harbinger did agree to "take all actions reasonably necessary to expeditiously satisfy all received redemption requests of investors;" indeed, The New York Times reports that Falcone's incredibly limited ban was designed to allow him to liquidate Harbinger's hedge funds over time, rather than in a fire-sale that would harm investors, although the settlement specifies that the redemptions could lead to the "orderly disposition of Harbinger Capital fund assets."
The SEC sued Harbinger and Falcone in June, accusing them of four separate frauds, notably favoring large investors, an illegal short squeeze and over Falcone's taking of a $113.2 million loan from his hedge funds to pay a tax bill.
Aug 25 2014 | 11:21am ET
As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…
Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...