Falcone Barred From Insurer For Seven Years

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."


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Scene Last Night: Clinton, Schwarzman, Corzine, Neidich, Diamond

Nov 25 2014 | 5:52pm ET

Steve Schwarzman had a granddaughter yesterday morning. Last night he sat one table...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.