New York (HedgeCo.net) – The hedge fund manager who challenged the US wireless broadband connectivity system by launching a cheaper alternative has been under investigation by the SEC for alleged manipulation of bond prices and favoring certain clients over others.
The SEC said that Philip Falcone, through his hedge fund Harbinger Capital Partners LLC, had “fraudulently obtained $113.2 million from a hedge fund that he advised and misappropriated the proceeds to pay his personal taxes.” Falcone took out a loan against his hedge fund in 2009.
“The notion that Mr. Falcone committed a fraud in connection with the loan from a Harbinger fund is unsupportable,” Falcone’s lawyer said. “The loan was obtained after receiving considered written legal advice from a leading national law firm on the basis of fully disclosed facts; that same firm proposed the idea of the loan, structured the transaction, documented it, advised on the timing and form of disclosure to investors, and explained it when investors made inquiries.The investors were fully paid back with interest.”
National broadband network company LightSquared, one of Falcone’s companies, had to declare bankruptcy earlier this year when the FCC recommended the reversal of the license that it granted in 2004, the National Telecommunications and Information Administration said that it would interfere with the current GPS systems. LightSquared is challenging the FCC’s proposals.
The SEC is seeking to ban Philip Falcone from serving as an officer or director of any public company, along with unspecified penalties and restitution.
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