Former hedge fund billionaire Philip Falcone, who previously ran Harbinger Capital, says that settling with the Securities and Exchange Commission was “not fun.”
“Let’s just say I ended up settling on negligence and that those weren’t the allegations,” he said at the Alpha Hedge East Conference in Florida on Monday when asked if the allegations against him were properly characterised.
“Again, it was a really challenging process. And it was not fun. And there’s a lot of things that happened that, you know, not everybody from the outside understands. But I just shake my head. And the SEC has to do what they do. And they have to keep things in line. And I don’t want to say I fault them. But, I think they were under pressure at the time.”
Falcone hasn’t really spoken publicly since he received a five-year ban from the securities industry in 2013. At the conference, he was interviewed by Maneet Ahuja, CNBC’s hedge fund specialist and author of “The Alpha Masters.”
Falcone rose to prominence shorting subprime mortgages during the financial crisis. The trade made him a billionaire, but he has since dropped off of the Forbes list.
In the summer of 2012, the SEC charged Falcone and his Harbinger Capital Partners with securities fraud. Specifically, Falcone borrowed $113.2 million from Harbinger’s Special Situations Fund to pay his personal state and federal taxes, while blocking the fund’s investors from redeeming their money.
A year later, Falcone reached an agreement with the SEC to be barred from the securities industry for at least five years. He also agreed to pay an $18 million penalty. As part of the agreement, Falcone and Harbinger admitted to wrongdoing.
Falcone was the first big case after the SEC changed its no-admit, no-deny policy. Ahuja asked Falcone if he felt the case was handled fairly. He couldn’t say whether it was fair or unfair though.
“I think at some point, I will be able to discuss it in full detail because there’s a lot of things that people don’t know,” Falcone said. “And it’s — it was very painful because of, you know, I’ve always, kind of, looked at myself as integrity [unclear] … and especially from an investor perspective, that’s the most important thing.”
It was the media coverage that bothered him. He felt they portrayed him unfairly.
So it was the nastiness that people, don’t know where, that saw in the press. And they immediately think that you are this person. And that was that was the most difficult part. And it’s still, I’m still, like — irks me because it’s not me. But, you know, I can’t really say too much about it, you know. It is what it is. You try to put it behind you and move on. But, there are still times where, you know, I, kind of, wish I would have still fought. But, it was best to, you know, try to end it and move on. And — you know, so far, so good. But, it’s still — still there. And not much I can do about it other than, kind of, sit and bite my lip.”
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