Skip to main content

Phil Falcone Gets An Extra Couple Years To Devote His Energies Entirely To LightSquared

  • Author:
  • Updated:
    Original:

Back in 2009, hedge fund manager Phil Falcone came up with an idea considered genius only if you take an elastic view of securities laws, which Falcone certainly did (does?). Upon being notified by his personal accountants that he owed the government more than $100 million in state and federal taxes, and turning down the suggestion to borrow against various assets including his Manhattan townhouses, artwork, interest in the Minnesota Wild, and an estate on St. Bart's, Falcone decided to just borrow the money from a gated investor fund, despite being told in no uncertain terms it was a bad idea by Harbinger's "longstanding" outside counsel. Investors in that fund turned out not to like the idea very much, with the SEC feeling similarly. But while the regulator felt 5 years (plus an $18 million fine) was enough time for Falcone to really think about what he'd done-- a punishment Falcone described as a blessing in disguise--, the New York Department of Financial Services felt otherwise.

Billionaire Philip Falcone was banned by New York state’s top financial watchdog from being an officer or director of Fidelity & Guaranty Life for seven years for using his hedge funds’ money for his personal taxes. Falcone, 51, is also barred from “direct or indirect control over the management, policies, operations” and investment funds of Fidelity’s New York unit, the state’s Department of Financial Services said today in a statement. The ban also applies to employees of his hedge fund, Harbinger Capital Partners LLC, which controls the insurance company. The ban stems from Falcone’s accord in August with the U.S. Securities and Exchange Commission, which had sued him over the same allegations and banned him from the securities industry for five years. In that case, Falcone admitted to improperly borrowing $113.2 million from the fund and giving preferential treatment to some clients when returning their money.

The wrongdoing exposes “serious issues related to Mr. Falcone’s fitness to control the management, operations, and policyholder funds of a New York insurance company,” Lawsky said in the statement. The statement didn’t say what specific role, if any, Falcone had at Fidelity.

Falcone Banned at Fidelity for 7 Years by N.Y.’s Lawsky [Bloomberg]
New York Bans Harbinger's Falcone From Insurance Role [WSJ]
Related: Phil Falcone’s Ban From The Securities Industry Not So Much A Ban As It Is A Blessing, Says Phil Falcone

Related

News

Phil Falcone Needs More Cash

News

So Phil Falcone Took Out Another Loan, So What?

News

Phil Falcone Pays Back Loan He Took From Investors To Pay Personal Taxes

News

Phil Falcone Can Now Devote Himself Full Time To Building A Low-Cost Wireless Network That's Going To Blow Your Mind

News

Phil Falcone Is Turning His Life Around

To put it lightly, the last couple years have been a rather dark time for Phil Falcone. Though his woes are too numerous to mention in full, they include: the adversity he's faced in getting people to believe in LightSquared; his unbelievably pissy investors, who still aren't over the time he borrowed $113 million from a gated fund to pay personal taxes, or offered to pay out redemptions in illiquid LightSquared equity; the Securities and Exchange Commission, which wants him banned from the industry for life; the woman who once offered a respite from it all, who now won't even come out of her room when she knows he's home; and, of course, the plunging returns in his once highly profitable hedge fund. It would be enough to make a grown man say 'Fuck, it. I'm done.' Put a few things in a sack, tie it to the blade of a hockey stick, and hitchhike back to Minnesota. But Phil didn't do that and now? After a merciless storm of shit that felt like it would never ease up? After long days of investors and regulators breathing down his neck and nights of having to pound on the front door because he was accidentally purposely locked out of the house? The tide feels like it's turning for Philip Falcone. Beleaguered hedge fund honcho Phil Falcone’s big bet on his own publicly traded entity, Harbinger Group, is helping to lift his troubled hedge fund, Harbinger Capital Management, out of the deep end. Falcone’s flagship fund posted returns of 10.6 percent in July and a whopping 28 percent gain in June. Of course, he's still down 5.8 percent year-to-date, and the the director of the SEC's division of enforcement wants hedge fund graduate schools to use Harbinger as a case study during the unit on "how to operate a hedge fund unlawfully," but tonight? Tonight he tells Lisa to treat herself to something nice. Tonight he tells Wilbur to pull the baby grand out of the closet, where it's sat untouched for months. Tonight his key works in the lock. Tonight we dance. Phil Helps Himself [NYP]

News

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]

News

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.

News

Phil Falcone Isn't Finished Here