Falcone’s SEC Securities Ban Settlement Gets Approval

Billionaire hedge-fund manager Philip Falcone’s $18 million settlement with U.S. regulators that includes a five-year ban from the securities industry and an admission of wrongdoing was accepted by a federal judge.

U.S. District Judge Paul A. Crotty in Manhattan today said in a written order that the agreement reached last month with Falcone and Harbinger Capital Partners LLC is “appropriate and proportionate to the defendants’ admitted wrongful conduct.”

The SEC accused Falcone, who became a billionaire by betting against the U.S. housing market in 2006, of improperly borrowing money from his fund to pay his personal taxes and said he gave preferential treatment to some of his investors in returning their money. The regulator also accused Falcone of engaging in a short squeeze of bonds held by a Canadian manufacturer.

The bar from the securities industry will allow Falcone to liquidate his hedge funds under the supervision of an independent monitor, the SEC said last month. He and his firm will pay an $18 million fine.

Eric Goldstein, a lawyer representing Harbinger Capital, didn’t return a phone call or e-mail after regular business hours seeking comment.

The case is SEC v. Philip A. Falcone, 12-cv-05027, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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