Fund manager Phil Falcone is under the gun. The SEC filed Wells notices on Falcone and his hedge fund Harbinger Capital Partners on Friday, indicating charges are likely according to an article in the Wall Street Journal.
So, Phil Falcone… What’s the Frequency?
The issue appears to be whether Harbinger allowed some investors, like Goldman Sachs (GS), “to cash out of their holdings while barring other clients from withdrawing their money, according to people familiar with the matter.” The WSJ writes, “Harbinger said it is ‘disappointed’ with the issuance of the Wells notices, and if the SEC decides to bring an enforcement action, it intends to ‘vigorously defend against it,’ according to the filing.” Falcone’s issues with the SEC began in March, when Harbinger disclosed “the SEC was investigating the firm for possible market manipulation and also probing a loan that Mr. Falcone took out from the fund in October 2009.” On Friday, December 9, “the firm diclosed a third issue related to the circumstances and disclosure related to agreements with certain fund investors.”
Phil Falcone and the Feds
Phil Falcone is no stranger to federal investigators – not that he has actually ever been charged with anything before. Recently, Harbinger received notification from the SEC that it may be sued for its intent to halt investor withdraws for the end of the year and it has come under fire for its involvement with LightSquared, specifically Senator Charles Grassley (R-Iowa) has questioned whether Falcone made donations to Democrats to smoothe the “regulatory way” for the company. Specifically, Falcone has been asked to testify on his investment in LightSquared and asked to produce documents detailing his firm’s communications with Obama administration officials over Light Squared, by both the U.S. Judiciary Committee and the Senate Agriculture Committee.