In a settlement with the Securities and Exchange Commission (SEC), billionaire hedge fund manager Philip Falcone has agreed to be barred from the securities industry for five years.
He and his firm, Harbinger Capital Partners, also admitted to wrongdoing and must pay US$18 million in fines. Of that amount, Falcone will pay about $11.5 million in fines, and the company will pay a $6.5-million penalty.
The SEC filed enforcement actions last year alleging that Falcone improperly used $113 million in fund assets to pay his personal taxes, secretly favoured certain customer redemption requests at the expense of other investors and conducted an improper short squeeze in bonds issued by a Canadian manufacturing company, Maax Holdings.
In the settlement papers filed in court, Falcone and Harbinger admit to multiple acts of misconduct that harmed investors and interfered with the normal functioning of the securities markets.
“Falcone and Harbinger engaged in serious misconduct that harmed investors, and their admissions leave no doubt that they violated the federal securities laws,” says Andrew Ceresney, co-director of the SEC’s division of enforcement. “Falcone must now pay a heavy price for his misconduct by surrendering millions of dollars and being barred from the hedge fund industry.”