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Falcone Agrees to Two-Year Hedge-Fund Ban to Settle SEC Lawsuit

Philip Falcone, who once ran one of the biggest hedge funds in the industry, reached a settlement with regulators that bars him from investing client money for at least two years, while allowing him to run a company modeled on Warren Buffett’s Berkshire Hathaway Inc.

Under the proposed settlement, Falcone’s hedge-fund firm Harbinger Capital Partners LLC would pay about $18 million in disgorgement, interest and penalties to resolve Securities and Exchange Commission claims that he improperly borrowed money from his fund to pay his taxes, according to a public filing today. The agreement, which is subject to approval by SEC commissioners and a U.S. court, would allow him to continue his role as chief executive officer of Harbinger Group Inc., a $1.3 billion public holding company he controls.