"Hedge fund manager Falcone to settle fraud case" by MARCY GORDON | AP Business Writer, May 10, 2013
WASHINGTON — Billionaire hedge fund manager Philip Falcone and his firm have agreed to pay $18 million to settle civil fraud charges that he used fund money to pay his taxes and favored some clients over others.
Falcone would be barred for two years from working as an investment adviser or broker under the agreement in principle between the Securities and Exchange Commission and Falcone and Harbinger Capital Partners.
Falcone and Harbinger would neither admit to nor deny the SEC’s allegations. Falcone could still own Harbinger Capital, but it would be overseen by an independent monitor. Falcone could not make investments for the fund or raise money for it.
The SEC alleged that from 2006 through early 2008, Falcone manipulated the market for high-yield, high-risk bonds issued by Maax Holdings Inc. Using fund money, Falcone bought many of the bonds to shrink the supply and drive up prices, the SEC said. The SEC also said Falcone and Harbinger secretly gave some key investors the right to cash out.
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Related: SEC rejects $18M deal with Falcone, hedge fund
