Falcone Agrees to Five-Year Ban in Stiffer Deal With SEC (BusinessWeek)
For Philip Falcone, the price of hanging on to his dream of building a wireless broadband network is a new, tougher settlement with U.S. regulators that requires him to admit wrongdoing and bans him from the hedge-fund industry that made him a billionaire. Falcone will be barred from the industry for at least five years, up from two years under a proposed deal rejected by the U.S. Securities and Exchange Commission in July, the regulator said yesterday. The earlier settlement didn’t force him or Harbinger Capital Partners LLC, his $3 billion firm, to admit any wrongdoing. In return, the agency is allowing him to continue running Harbinger Group Inc (NYSE:HRG), a publicly traded company, as well as LightSquared Inc., a venture that is seeking to build a wireless broadband network.
Kyle Bass Said to Bet on J.C. Penney Comeback With Loan Deal (BusinessWeek)
Hedge-fund manager J. Kyle Bass is betting on a comeback by J.C. Penney Company, Inc. (NYSE:JCP), the retailer roiled by falling sales and a dispute with investor William Ackman, according to a person familiar with the matter. Bass, who focuses on corporate turnarounds, has accumulated a long position in J.C. Penney Company, Inc. (NYSE:JCP) over the past two weeks by buying the company’s secured loans, said the person, who asked not to be named because the information is private. He has also sold a type of insurance called credit-default swaps to other investors that pays off only if the Plano, Texas-based company defaults on its debts, an event he considers unlikely, said the person.
BlackRock poaches NewSmith manager for underperforming UK Income fund (MoneyMarketing)
BlackRock, Inc. (NYSE:BLK) has hired NewSmith’s Mark Wharrier to work with Adam Avigdori on the £583m BlackRock UK Income fund. Wharrier, who joins BlackRock, Inc. (NYSE:BLK) in mid-September, is a co-manager of the flagship NewSmith UK Hedge fund, which invests in the FTSE 350. He is also co-manager on the NewSmith UK Equity fund, which is a Ucits IV vehicle. Avigdori, who has worked as co-manager on the BlackRock, Inc. (NYSE:BLK) UK Income since 2009, has experienced poor performance with the fund, which is fourth quartile in the IMA UK Equity Income sector over three years to 19 August 2013.
InterOil fiasco scorches Paulson (NYPost)
A small oil and gas exploration company burned its investors yesterday — including hedge-fund titan John Paulson. The controversial InterOil Corp. said its months-long exclusive talks with a unit of ExxonMobil Corp. to develop gas fields in Papua New Guinea had ended without a deal. Non-exclusive talks continue, InterOil said. Reports by the company earlier this year of interest from several bidders in developing the gas fields pumped the stock from the mid-$50s to an intra-day high of $106 in May — and attracted the interest of the well-known Paulson & Co.
Cash-Poor Companies Feed Investor Hunger for ‘Happy Meals’ (WSJ)
When Energy Conversion Devices Inc. needed cash, the struggling solar-panel maker turned itself into what Wall Street likes to call a “Happy Meal.” To make $316 million in bonds more appetizing, the company agreed to lend millions of its shares to hedge funds buying the bonds so they could simultaneously sell the stock in a bet against Energy Conversion’s success. A subsequent crisis in the solar-power industry hit Energy Conversion hard. The bonds, issued in 2008, plunged in value, and last year the company filed for bankruptcy protection, wiping out shareholders.