But Mr. Falcone and the SEC appear divided on two crucial questions, according to people familiar with the matter. The first point yet to be agreed on is the amount of possible financial sanctions, they said. The two sides also must resolve whether as part of the settlement Mr. Falcone would face a temporary ban from working in the securities industry or acting as a director of a public company. The hedge-fund billionaire's refusal to accept an industry ban, fearing it would essentially end his career, led to the breakdown of settlement talks last year...Harbinger and Mr. Falcone are being probed by the SEC on three fronts. About a year ago, Harbinger disclosed that it was under investigation by the SEC for possible market manipulation. It wasn't previously reported that the allegation involves a company called MAAX Holdings Inc., now called MAAX Corp., a Canadian maker of bathroom fixtures, according to people familiar with the matter. The SEC also has been looking at whether Harbinger misled investors by failing to disclose in a timely fashion a $113 million loan to Mr. Falcone from the fund's investors in 2009. Mr. Falcone has now repaid the loan money, which he used to help pay his personal taxes. The third issue the SEC is investigating is whether Harbinger agreed to allow some investors, including Goldman Sachs Group Inc., GS +3.71% to cash out of their holdings while barring other clients from withdrawing their money, or favored Goldman or other investors with information other clients didn't get during a 2009 restructuring of the firm. [WSJ, earlier]
Phil Falcone Maintains 'Absolute Lawfulness' Of Lending Himself A Hundred Mill From Investor Fund
Remember, back in 2009, when Phil Falcone realized he'd forgotten to set aside enough cash to cover his taxes and came up with the idea to loan himself the money from a gated investor fund? And investors got all bent out of shape about it and the SEC did too? If the former was looking for some sort of an apology and the latter was looking for some show of groveling (in an attempt to avoid paying a fine/have a judge rule he can't come within 200 feet of a public company sorry), sorry, 'cause Phil's not sorry.
Securities And Exchange Commission Still Hung Up About The Time Phil Falcone Borrowed Money From A Gated Fund To Pay Personal Taxes
Remember the time Harbinger Capital Partners founder Phil Falcone was a little short on cash, and decided to "borrow" $113 million from a fund in which redemptions had been suspended in order to pay personal taxes? Unfortunately for Big P, the SEC does. (The regulator also recalls he time he allegedly played favorites with Goldman and allegedly manipulated some markets.) Philip Falcone, the billionaire founder of Harbinger Capital Partners LLC, faces a lawsuit from U.S. regulators as soon as this week over claims he improperly borrowed client funds to pay his taxes and gave preferential treatment to Goldman Sachs Group Inc., according to two people familiar with the matter. Falcone, 49, may also face a market manipulation claim related to trading in bonds of MAAX Holdings Inc., said the people, who asked not to be identified because the matter isn’t public. The Securities and Exchange Commission voted to authorize enforcement staff to file the case, the people said. While perhaps not the best news Falcone has received in a while, it likely does not come as a surprise, as the SEC has been talking about the aforementioned offenses since last December (when they tried to get him banned from the securities industry). Either way, Phil, who should probably just not going home tonight unless he wants an earful, is planning to "contest to the suit." SEC Said To Authorize Lawsuit Against Harbinger’s Falcone [Bloomberg]
Who Wants To Invest In Phil Falcone's New Company?
Harbinger Global Corp is coming to an exchange near you. Phil Falcone, the embattled billionaire hedge fund manager, has put together an unorthodox IPO that will see his hedge fund firm contribute assets valued at $350 million to a blank check company that will trade publicly. In the deal, a special purpose acquisition company that is expected to trade on Nasdaq and be known as Harbinger Global Corp., will acquire a majority interest in an MGM-branded hotel and casino development in Vietnam and a minority interest in an iron ore producer working in Brazil. Funds run by Falcone’s Harbinger Capital Management that are contributing the assets will get an ownership stake that could be as high as 96% in Harbinger Global and Falcone is slated to become executive chairman of the company. Falcone’s move to become closely involved in a publicly-traded company is audacious given that he is currently facing securities fraud charges from the Securities & Exchange Commission. Yeah, well, people also thought it was audacious for him to invite a burlesque dancing pig he barely knew to come and live with him and she turned out to be the best thing that ever happened to him, so.