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Alternative Market Briefing

Hedge fund manager Phil Falcone agrees to SEC settlement, five-year ban

Tuesday, August 20, 2013

Bailey McCann, Opalesque New York:

Embattled hedge fund manager Phil Falcone, head of Harbinger Capital has agreed to a settlement with the Securities and Exchange Commission (SEC). That settlement includes a five-year ban from the financial industry and an admission of wrongdoing. The terms are a the result of charges brought by the regulator that Falcone improperly used funds from his hedge fund to repay personal loans, and improperly favored some investors.

The SEC filed enforcement actions in June 2012 alleging that Falcone improperly used $113m 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 today, Falcone and Harbinger admit to multiple acts of misconduct that harmed investors and interfered with the normal functioning of the securities markets.

The settlement must still be approved by the U.S. District Court for the Southern District of New York, and will include some $18m in fines and penalties to be paid by Falcone and Harbinger entities. Falcone has consented to the entry of a judgment barring him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or na......................

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