The SEC reached a settlement earlier this week with Minnesota Wild minority owner and hedge fund billionaire Philip Falcone for $11.5 million, which will include $6.5 million in surrendered profits, $1 million in accrued interest, and a $4 million fine.
Falcone, the man behind Harbinger Capital Partners, has contributed at least $60,000 to Democratic candidates and committees since 2003.
Under the agreement, Falcone must admit wrongdoing and is banned from the securities industry for five years. Harbinger will also be required to pay a $6.5 million fine for violating trade rules under the Securities Exchange Act of 1934.
The investigation began last summer when the SEC filed fraud charges against Falcone for misappropriating $113.2 million from his own firm to pay his personal taxes in 2009. The hedge fund manager, worth an estimated $1.2 billion by Forbes, loaned himself the money at a decreased interest rate without the approval from the board of directors or investors.
The SEC also accused Falcone and two Harbinger investment advisers guilty of market manipulation in which they staged a “short squeeze” by altering the price of bonds issued by Canadian manufacturing company, MAAX holdings Inc. According to the Star Tribune, Falcone orchestrated the power play in retaliation against investment giant Goldman Sachs, who was taking short positions against the MAAX bonds.
“Falcone and Harbinger engaged in serious misconduct that harmed investors, and their admissions leave no doubt that they violated the federal securities laws,” Andrew Ceresney, co-director of the SEC’s Division of Enforcement, told the Star Tribune Monday.