Falcone agrees SEC settlement over use of hedge fund cash

Michael Bow
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HEDGE fund tycoon Phil Falcone and his firm Harbinger Capital Partners yesterday accepted an $18m fine and five-year ban from the US trading watchdog after admitting improperly using client cash.

Billionaire Falcone illegally borrowed $113m from the fund to pay taxes, meaning investors could not access their cash in the fund, the US Securities and Exchange Commission (SEC) claimed.

Falcone and Harbinger yesterday admitted to wrongdoing.

He will pay $11.5m of the fine personally and Harbinger will pay the other $6.5m of the fine.

“Falcone and Harbinger engaged in serious misconduct that harmed investors, and their admissions leave no doubt that they violated the federal securities laws,” said Andrew Ceresney, co-director of the SEC’s enforcement division.

An initial deal between Falcone and regulators was rejected earlier this year. Falcone founded Harbinger Capital in 2001.