Saturday, 28 February 2015
Last updated 1 day ago
Oct 8 2013 | 12:55pm ET
New York State is throwing a little salt in the wound left by Harbinger Capital Management founder Philip Falcone's ban from the hedge fund industry.
The state's Department of Financial Services said yesterday that it had barred Falcone from serving as an officer or director of Fidelity & Guaranty Life for seven years. The insurer is owned by a Harbinger hedge fund.
New York cited the $113 million loan Falcone took from Harbinger hedge funds to pay a tax bill for the ban. The loan was one of the matters disposed of in his August settlement with the Securities and Exchange Commission that saw him barred from managing a hedge fund for five years but allows Falcone to continue to run his publicly-listed permanent capital vehicle, Harbinger Group.
Falcone and Harbinger Capital agreed to the New York settlement, which also bars Harbinger Capital employees from serving on the board or having "direct or indirect control over the management, policies, operations" and investment funds of Fidelity's New York unit. The agreement allows the ban to be effective outside of New York; Fidelity is based in Baltimore.
"It is vital to ensure that those who operate insurance companies will always put retirees and policyholders first and act with the utmost integrity," Benjamin Lawsky, New York's financial services superintendent, said.
Fidelity, which lists Falcone as its "ultimate controlling person," is preparing for an initial public offering. Harbinger Group will retain its majority stake in the insurer, which it acquired in 2011. Harbinger Group executives will be allowed to continue to run the company. Two Harbinger Capital executives, general counsel Robin Roger and CFO Keith Hladek, resigned from the Fidelity board in anticipation of the settlement.
New York used Falcone's admission of wrongdoing in the SEC deal to force its own settlement. A DFS spokesman said the agency approached Harbinger Capital in the wake of the settlement.
"It's very frustrating but it is what it is," Falcone told The New York Times. "I don't need to knock my head against a wall."
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…