Embattled hedge funder Phil Falcone is being sued by an investor who alleges the manager choreographed an unfair stock swap between his firm, Harbinger, and a small public company called Spectrum Brands Holdings, Reuters reports.
Harbinger investor Alan Kahn thinks the hedge fund is overpaying for the assets of Spectrum, a vendor of pet care products and small appliances, which Falcone, as a major stockholder, also controls.
Kahn is suing other directors in addition to Falcone, as well as the hedge fund itself, for what he thinks was an unfair exchange price.
Falcone already owns the majority of Harbinger Group. Now he is planning to increase his stake to 94 per cent from 51.6 per cent by swapping 120 million newly issued shares of Harbinger for about 27.8 million shares of Spectrum Brands.
“HGI is vastly overpaying for the acquisition of assets from its majority and controlling shareholder,” according to the suit.
Falcone’s spokesman labelled the suit “meritless.”
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