Politics & Regulation Tax & Legal

Harbinger charges highlight investor redemption angst

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The US Securities and Exchange Commission filed fraud charges this week against Philip Falcone and his advisory firm Harbinger Capital Partners for conduct that allegedly included misappropriation of client assets, market manipulation and client betrayal. 

According to regulators, instead of paying his personal taxes with his own assets, Falcone obtained $113.2 million from a hedge fund that he and Harbinger managed during a period when Harbinger had precluded investors in the fund from redeeming their interests. Investor approval was not sought or obtained for this related party transaction, the SEC says in its complaint. The transaction was structured as