Falcone’s Harbinger Group Extends Rally on Leucadia Deal

Harbinger Group Inc. (HRG), led by Philip Falcone, rallied in New York trading after his hedge funds said they sold shares to investors led by Leucadia National Corp. (LUK)

Harbinger Group jumped 31 cents, or 3 percent, to $10.68 at 4:01 p.m. The company, which runs businesses from life insurance to pet supplies, advanced 3.1 percent yesterday after the hedge funds said Sept. 27 that they sold 18.6 million shares to Leucadia for $8.50 apiece, giving the buyer a stake of about 13 percent.

Falcone, 51, agreed in August to meet requests from hedge fund clients who sought their money back after he reached a settlement with the U.S. Securities and Exchange Commission. Manal Mehta, an investor in Harbinger Group through his Sunesis Capital LLC, said the stock price had been pressured by uncertainty about how Falcone’s funds would cut their holdings.

“The fact that that stake is being sold down in an orderly manner and going to very smart people like Leucadia is a significant positive,” Mehta said in an e-mail. The funds said other investors, which weren’t identified in a filing last week, bought an additional 5.1 million shares.

Falcone’s accord with the SEC includes a five-year ban from the securities industry and an admission of wrongdoing for improperly borrowing the funds’ money for his personal taxes, and giving preferential treatment to some clients when returning their money.

Leucadia, which owns investment bank Jefferies Group LLC, is led by Chief Executive Officer Richard Handler. Leucadia and Harbinger Group are both based in New York.

To contact the reporters on this story: Zachary Tracer in New York at ztracer1@bloomberg.net; Saijel Kishan in New York at skishan@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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