Philip Falcone and the hedge fund he manages Harbinger Capital received Wells Notices from the Securities and Exchange Commission in December 2011. A Wells Notice from the SEC is notice to the recipients that the government is considering filing civil fraud charges for manipulative trading during the period from 2006 to 2008.
A Wells Notice is a recommendation from the enforcement division and while the SEC can decline to follow it, in practice the SEC generally does follow the action suggested by enforcement.
Falcone borrowed over $100 million from Harbinger in October 2009, and although it has been repaid, news sources indicate that the SEC may be investigating whether investors were apprised in a timely manner about the loan.
This fund, which once oversaw $26 billion in assets has experienced large losses and client withdrawals and now manages about $5 billion. Of that amount nearly half is invested in LightSquared, a controversial company thatis making plans to build a wireless network using new technology that opponents claim interferes with current global positioning systems.
Earlier in February 2011, a disgruntled investor filed a class action against Falcone and Harbinger. Falcone had made big investments in LightSquared Inc., whose conditional license was revoked in February.
Harbinger Capital Partners LLC lost 47% as a result. Most of this loss was in Harbinger Capital Partners Offshore Fund I following a reduction of 59% in the value of the fund’s stake in LightSquared.
Harbinger had invested $3 billion of the $4 billion in LightSquared, according to recent Bloomberg news.
Rex Securities Law , located in Boca Raton, FL, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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