Harbinger Capital COO to Pay SEC Fine Over Falcone Scheme

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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Related on ThinkAdvisor:

• Hedge Fund Manager Falcone Agrees to Pay $18M to SEC, Admits Wrongdoing