New York-based hedge fund manager Philip Falcone and his advisory firm Harbinger Capital Partners agreed Monday to pay the Securities and Exchange Commission $18 million and admit wrongdoing. Falcone also agreed to be barred from the securities industry for at least five years.
Last June, the SEC filed enforcement actions alleging that Falcone improperly used $113 million in fund assets to pay his personal taxes, secretly favored certain customer redemption requests at the expense of other investors, and conducted an improper “short squeeze” in bonds issued by a Canadian manufacturing company.
In the settlement papers filed in court Monday, the SEC says that Falcone and Harbinger admitted to multiple acts of misconduct that harmed investors and interfered with the normal functioning of the securities markets.
SEC Chairwoman Mary Jo White recently announced that she’d be changing the agency’s “neither admit nor deny” settlement policy by seeking admissions of guilt in some of the more egregious cases.
“Falcone and Harbinger engaged in serious misconduct that harmed investors, and their admissions leave no doubt that they violated the federal securities laws,” said Andrew Ceresney, co-director of the SEC’s Division of Enforcement, in a statement. “Falcone must now pay a heavy price for his misconduct by surrendering millions of dollars and being barred from the hedge fund industry.”