Phil Falcone and his firm Harbinger Capital Partners have taken a settlement offer in the investigation being conducted by the Securities and Exchange Commission. The agency said today in a press release that they must pay over $18 million as part of the settlement—and also admit to wrongdoing. Phil Falcone himself also agreed to be banned from the securities industry for at least five years.
SEC rejected Phil Falcone’s earlier settlement offer
Last month the SEC rejected a similar settlement offered by Phil Falcone. That settlement also included an $18 million fine but would have kept him from the industry for only two years instead of five. The investigation dates back to June of last year when Phil Falcone was accused of using $113 million of his fund’s assets to pay his own taxes. He was also accused of favoring some customer redemption requests over others and conducting an improper short squeeze in bonds from a manufacturing company located in Canada.
The settlement papers today indicate that both Phil Falcone and his firm Harbinger Capital “admit to multiple acts of misconduct that harmed investors and interfered with the normal functioning of the securities markets.”
Phil Falcone’s settlement must still be finalized
According to regulators, the settlement must still be approved by the U.S. District Court for the Southern District of New York. It requires Phil Falcone to pay more than $6.5 million in disgorgement, plus more than $1 million in prejudgment interest and a $4 million penalty. His firm Harbinger Capital is required to pay a penalty of $6.5 million.
Phil Falcone has agreed to be barred from associating “with any broker, dealer, investment advisor, municipal securities dealer, municipal advisor, transfer agent or nationally recognized statistical rating organization” for five years. After five years, he can then reapply. Under the ban, he will receive assistance with the liquidation of his hedge funds under independent supervision.
