More On Legal & Compliancefrom The Advisor's Professional Library
- The New and Improved Form ADV Whether an RIA is describing its investment strategy in advertisements or in the new Form ADV Part 2, it is important the firm articulates material risks faced by advisory clients and avoids language that might be construed as a guarantee.
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
The former chief operating officer at Harbinger Capital Partners LLC agreed Monday to settle charges by the Securities and Exchange Commission that he assisted a scheme by the firm and its owner Philip A. Falcone to misappropriate millions of dollars from a hedge fund they managed to pay Falcone’s personal taxes.
Peter A. Jenson, who was charged along with Falcone and Harbinger in a 2012 enforcement action by the SEC, has agreed to admit wrongdoing and pay a $200,000 penalty.
Jenson has also agreed to be prohibited from working in the securities industry for at least two years, and agreed to be suspended for at least two years from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC.
The settlement papers were filed in U.S. District Court for the Southern District of New York and must be approved by the court.
Falcone and Harbinger consented to a settlement last year in which they agreed to pay more than $18 million and admit wrongdoing.
“Jenson assisted a fraudulent scheme that allowed Falcone to put his own interests ahead of investors by engaging in a related party loan on favorable terms,” said Julie Riewe, co-chief of the SEC Enforcement Division’s Asset Management Unit, in a Monday statement. “This settlement shows that we hold accountable not only those who perpetrate a scheme, but also those who enable them.”
In his settlement, Jenson admits that with knowledge of Falcone’s and Harbinger’s violations, he provided substantial assistance in connection with the loan by failing to:
Ensure that the lender (Harbinger Capital Partners Special Situations Fund) had separate counsel;
Ensure that the loan was consistent with Falcone’s fiduciary obligations to the Special Situations Fund;
Ensure that Falcone paid an “above market” interest rate on the loan.
Timely disclose the loan to investors; and
Take actions to cause the lender to accelerate Falcone’s payment on the loan once investors in the Special Situations Fund were permitted to begin redeeming their investments.
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