Wednesday, June 27, 2012

Climateer Line of the Day: Phil Falcone Edition

“Today’s charges read like the final exam in a graduate school course 
in how to operate a hedge fund unlawfully”

-Robert Khuzami
Director, Division of Enforcement
United States Securities and Exchange Commission

From the SEC:
Washington, D.C., June 27, 2012 — The Securities and Exchange Commission today filed fraud charges against New York-based hedge fund adviser Philip A. Falcone and his advisory firm, Harbinger Capital Partners LLC for illicit conduct that included misappropriation of client assets, market manipulation, and betraying clients. The SEC also charged Peter A. Jenson, Harbinger’s former Chief Operating Officer, for aiding and abetting the misappropriation scheme. Additionally, the SEC reached a settlement with Harbinger for unlawful trading.

The SEC alleges that Falcone used fund assets to pay his taxes, conducted an illegal “short squeeze” to manipulate bond prices, secretly favored certain customers at the expense of others, and that Harbinger unlawfully bought equity securities in a public offering, after having sold short the same security during a restricted period. 
The SEC press release.