NEW YORK, July 19 The U.S. Securities and
Exchange Commission voted on Thursday to reject a deal its
enforcement division had struck with embattled hedge fund
manager Philip Falcone and his hedge fund Harbinger Capital
Partners, according to a regulatory filing by Falcone's publicly
traded company Harbinger Group Inc.
The SEC has not released any public explanation of the
decision. SEC spokesman Kevin Callahan did not immediately
respond to a request for comment.
Falcone announced in May he would pay $18 million to settle
two SEC lawsuits accusing him of market manipulation, giving
preferential treatment to certain investors and borrowing cash
from his own fund to pay his personal taxes.
The suits were not filed against Harbinger Group Inc, the
publicly traded investment company where Falcone is chairman and
chief executive officer. They targeted his hedge fund Harbinger
Capital Partners and other related funds.
While the dollar amount of the settlement was relatively
small, the deal would have required him to return money to his
hedge fund investors and would have effectively prohibited him
from starting a new hedge fund for the next two years.
It would, however, have permitted Falcone to remain CEO of
the Harbinger Group.
Falcone's lawyer Matthew Dontzin did not immediately respond
to a request for comment.
The rejection of the settlement comes as SEC Chair Mary Jo
White has said she intends to be more aggressive in dealing with
settlements and to take more cases to trial.