Billionaire hedge-fund manager Philip Falcone agreed to be banned from the securities industry for at least five years and admitted wrongdoing to settle claims by the U.S. Securities and Exchange Commission.
Falcone and his New York-based Harbinger Capital Partners LLC agreed to pay an $18 million fine, the regulator said today in a statement. The bar will allow him to liquidate his hedge funds under the supervision of an independent monitor, according to the agency, which last month rejected an earlier settlement proposal.
The SEC accused Falcone of improperly borrowing money from his fund to pay his personal taxes and favoring some investors over others in returning their money. The regulator also accused Falcone of engaging in a short squeeze of bonds held by a Canadian manufacturer, a transaction in which a buyer limits the supply of a security to drive up prices and cause losses for investors betting against the security.
“I am pleased that we were able to reach a settlement to resolve these matters with the SEC,” Falcone said in an e- mailed statement. “I believe putting these issues behind me now is the best course of action for me and our investors. It will allow me to continue to focus on my permanent capital vehicles and maximizing the value of LightSquared for all stakeholders.”
The settlement is pending approval by the U.S. District Court for the Southern District of New York.
