(Corrects year in second to last paragraph to 2007)
* At least four investment professionals have left fund
* Harbinger trying to streamline and cut fund staff
* Fund's assets are down to about $7 bln from $26 bln peak
By Emily Chasan and Matthew Goldstein
NEW YORK, Jan 12 (Reuters) - Prominent hedge fund manager Phil Falcone's $7 billion Harbinger Capital Management has been hit by a series of high profile departures in the past few weeks, according to people familiar with the fund.
While some departures were voluntary, others were part of an effort to cut the fund's staff, as the firm's assets have shrunk from a peak of $26.5 billion in 2008, the sources said.
Earlier this week, Falcone wrote to his investors saying Lawrence Clark, 39, a senior analyst on the firm's investment team since 2007, would be leaving to start his own fund. But Falcone's letter did not mention the recent departure of three other Harbinger employees.
Kenneth Turano, a 29-year-old trader who was described as close to Clark, also left in the past few days and is expected to join a fund Clark is launching, one of the sources said.
While Clark and Turano left voluntarily, some other Harbinger employees have been pushed out the door, the sources said. Clark Baker, 49, and Eli Benson, 36, both investment analysts at Harbinger, were let go in the past few weeks, according to the sources, who asked not to be named because they were not authorized to speak to the media. Benson and Baker could not be reached for comment.
One person familiar with Harbinger suggested that some of the departures reflected a "rightsizing" of the fund and an attempt to streamline its operations.
Others, including several investors, suggested it may reflect the limited ability Falcone's fund has to make big investment bets with so much capital tied up in a big telecom bet.
Falcone's fund is the primary investor and owner of a startup wireless telecom called LightSquared, which has an ambitious plan to bring high-speed mobile Internet access to all corners of the United States.
The investment, which represents nearly 40 percent of Harbinger's total assets, has unnerved some investors because of the speculative nature of the bet.
Over the past few months, the New York-based hedge fund has been liquidating several of its other positions amid redemption requests from some of its big investors, according to other sources familiar with the fund's performance.
While Harbinger has not released its full-year numbers yet, Falcone's flagship fund was down about 12 percent for the year as of mid-December, according to an investor. The firm's Special Situations Fund, which Falcone has limited withdrawals from for roughly two years, ended the year down about 12.3 percent as well, according to the investor.
The investor, who did not want to be identified, said Falcone was losing a lot of research firepower with the departures of Clark, Baker and Benson.
In the letter, Falcone said he was "very supportive" of Clark's decision to launch his own fund. Benson, a distressed debt expert, had been with Harbinger since 2005.
Baker, meanwhile, had a role in helping to manage Falcone's profitable bet on the collapse of the subprime housing market. It was the subprime bet that made Falcone the toast of the hedge fund world and turned him into an overnight billionaire with a 116 percent return in 2007.
Turano, who joined Harbinger in 2005 and reported to top trader Robert Lambert, had a natural kinship with Falcone. Turano played on Harvard University's hockey team, where Falcone, who was born in Chisholm, Minnesota, was a star player some 20 years before. (Reporting by Emily Chasan and Matthew Goldstein; Editing by Gary Hill and Steve Orlofsky)