The US Securities and Exchange Commission (SEC) has rejected an US$18 million settlement that would have banned billionaire hedge fund manager Philip Falcone from the securities industry for two years.
In May this year, Falcone reached agreement with staff in the SEC’s enforcement division to pay $18m to settle two civil actions without admitting or denying wrongdoing.
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The deal sought to settle civil fraud charges by fining Falcone and hedge-fund firm Harbinger Capital $18 million. The SEC has accused Falcone and the firm of using fund money to pay his taxes and favouring some clients over others.
In the complaint, the SEC alleged that Falcone has used fund assets to pay his taxes, favoured some clients over others as well as conducted an illegal ‘short squeeze’ to manipulate bond prices.
The SEC also accused that Harbinger unlawfully bought equity securities in a public offering, after having sold short the same security during a restricted period.
The SEC also said Falcone illegally loaned himself US$113 million from the fund to pay his taxes.
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By GlobalDataThe lawsuits were not filed against Harbinger Group, the publicly traded investment company where Falcone is chairman and chief executive officer. Instead, they targeted his hedge fund Harbinger Capital Partners and other related funds.
Falcone manages roughly US$3.1 billion in assets.
