The five-story mansion, where the couple lives with their twin daughters, boasts an indoor swimming pool. In 2009, he paid $49 million for a 27-room Manhattan townhouse that used to be the home of former Penthouse publisher Bob Guccione. His big bet on the collapse of the housing market gave him the dollars to catapult himself and his wife, Lisa Maria, into New York society. After developing expertise in credit markets as a high-yield and distressed securities trader at Kidder Peabody, Falcone set off on his own, often returning to his roots and hiring former Harvard hockey players to work with him. The youngest of nine, he grew up in a three-bedroom home.Ī smart student, he attended Harvard University where he was a star hockey player and graduated in 1984 with a degree in economics. SOCIETY SETįalcone grew up poor in Chisholm, Minnesota, an iron mining town of 5,000 near the Canadian border. “I believe that HGI is well positioned for the next phase of its evolution, and we are excited about the future,” he added. I suspect that a judge looking at this, and perhaps commissioners looking at this before it gets out of the SEC will be asking some tough question of the SEC lawyers.”įalcone, in a press release accompanying Harbinger Group’s earnings on Thursday, said he had grown the business “from a shell company holding approximately $150 million in cash and short-term investments to a diversified holding company with over $27 billion in assets and four key operating subsidiaries in the consumer products, insurance, energy and financial services business. “It’s an unusual settlement, I haven’t seen one like this. “If someone has really done something in the SEC’s view that has created investor harm, leaving them in a position where they can commit further mischief doesn’t make a lot of sense,” he said. Evan Stewart, a partner at Zuckerman Spaeder who is not involved in the case, said he thought the SEC might have a hard time getting the deal approved. He will continue to run Harbinger Group, which separately reported quarterly results on Thursday.Ĭ. Through this exception, Falcone will be able to oversee a slow unwind of his hedge funds’ investments, which include private equity-style tie-ups overseas, and return money to investors as they submit redemptions.
The government asserted that at the height of the financial crisis, when many of the fund’s assets were tied up in the collapse of Lehman Brothers, Falcone let select investors get out while denying that opportunity to others.Īs part of the deal, Falcone will be barred for two years from associating with broker-dealers and investment advisers, with the exception of the nine investment advisers managing Harbinger’s hedge funds. In its lawsuits, the SEC accused Falcone of market manipulation, giving preferential treatment to certain investors and borrowing cash from his own fund to pay his personal taxes. Harbinger Capital owned 96 percent of LightSquared. Falcone, 50, a high-profile money manager who has not been shy about flaunting his success, began to see his reputation unravel last year after his big bet on wireless telecom company LightSquared went bad, with the company forced to file for bankruptcy. The agreement would bring to a close one of several major problems for the beleaguered money manager. His hedge fund is one of the largest investors in Harbinger Group.
It would, however, would permit Falcone to remain CEO of Harbinger Group, which has been acquiring stakes in insurance-related businesses. While the dollar amount involved in the preliminary settlement is relatively small, the ban on new fundraising means Falcone will have to continue winding down his hedge fund. The settlement would also include the payment of $18 million. Securities and Exchange Commission was disclosed in a filing by Harbinger Group Inc, the publicly traded investment company of which Falcone is chairman and chief executive. The agreement by Falcone and his hedge fund, Harbinger Capital Partners, to settle two lawsuits brought by the U.S. Philip Falcone, chief executive officer and chief investment officer for Harbinger Capital Partners, participates in a panel discussion during the Skybridge Alternatives (SALT) Conference in Las Vegas, Nevada May, 9, 2012.