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Continued: 2 years in penalty box for Falcone

  • Article by: DAVID PHELPS , Star Tribune
  • Last update: May 12, 2013 - 10:24 AM

Matt Boos, a Fredrikson & Byron attorney in Minneapolis who handles SEC cases, said the penalties seemed “light.”

“I imagine Mr. Falcone is pleased with this result,” Boos said. “It wouldn’t surprise me if someone went to a hearing and found these actions — preferential treatment, using investor funds to pay taxes and market manipulation — that someone would face a lifetime industry ban.”

Star Tribune Staff Writer Patrick Kennedy contributed to this story.

David Phelps • 612-673-7269

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  • Philip Falcone

  • Proposed settlement

    The settlement between CEO Philip Falcone of Harbinger Capital Partners and the Securities and Exchange Commission (SEC) was made without Harbinger admitting or denying any of the SEC allegations. The settlement is subject to approval by SEC commissioners and the U.S. District Court in New York. Terms of the settlement include:

    Philip Falcone

    • would be banned for two years from serving as an investment adviser.

    • may continue to serve as CEO and chairman of Harbinger Group, his publicly traded holding company.

    • may not perform any management functions at investment advisers.

    Harbinger Capital

    • must pay $18 million in penalties ($4 million of which will come from Falcone).

    • must satisfy all received redemption requests of investors in the Harbinger Capital funds.

    • may not raise new capital or make capital calls from existing investors.

    • will be subject to an independent monitor.

    Philip Falcone

    Age: 50

    Hometown: Chisholm, Minn.

    Family: married; twin daughters

    Education: Bachelor of Arts degree in economics, Harvard University, 1984

    Career history: Junk-bond trader, Kidder Peabody & Co., 1985-90; president, AAB Manufacturing, 1990-95; senior high-yield debt trader, First Union Capital Markets, 1995-97; head of high-yield trading, Gleacher Natwest, 1997-98; head of high-yield trading, Barclay’s Capital, 1998-2000; co-founded Harbinger Capital Partners Master Fund in 2001; chairman and CEO Harbinger Group Inc., 2009.

    Favorite quote: “I can’t guarantee that if you work hard you will be successful, but I can guarantee that if you don’t work hard, you won’t be successful.”

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