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Falcone Said to Face Lawsuit From Regulators Over Loan

Philip Falcone, the billionaire hedge-fund manager whose largest investment went bankrupt after being blocked by regulators, now faces a showdown in court with the Securities and Exchange Commission.

Falcone, the 49-year-old founder of Harbinger Capital Partners LLC, may be sued by the regulator as soon as this week over claims he improperly borrowed client money to pay his taxes, according to two people familiar with the matter. He may also face claims that he gave preferential treatment to Goldman Sachs Group Inc., an investor in his fund, and manipulated markets when trading bonds of MAAX Holdings Inc., said the people, who asked not to be identified because the matter isn’t public.