Saturday, 18 April 2015
Last updated 21 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.
Mar 20 2015 | 12:45pm ET
StreetWise Partners, a non-profit organization that works with low-income individuals to help them overcome employment barriers, raised over $275,000 at the 2015 Raising the Ante Charity Poker Tournament and Casino Event last Wednesday evening at Capitale. Here are some photos from the event. Read more…