NY bans fund manager Falcone from insurance unit

Mon Oct 7, 2013 5:08pm EDT
 
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By Svea Herbst-Bayliss and Katya Wachtel

BOSTON/NEW YORK (Reuters) - Hedge fund manager Philip Falcone, banned from the securities industry for five years by U.S. regulators, is also being banned for seven years from decision-making roles at Fidelity & Guaranty Life Insurance, a unit of his firm, New York officials said on Monday.

Falcone is "banned during that period from serving as an officer or director of Fidelity & Guaranty Life and its subsidiaries or any New York-licensed insurer, as well as participating in the selection of any such officers or directors," the New York State Department of Financial Services said.

Fidelity & Guaranty Life is a unit of Harbinger Group, which is majority-owned by Falcone's Harbinger Capital. The insurance unit is planning to sell shares to the public.

The agreement does not require him to sell any of his interest in the insurance operator, according to a person familiar with the matter.

Falcone is also forbidden from "exercising direct or indirect control over the management, policies, operations, and investment funds" of Fidelity & Guaranty Life or any other New York-licensed insurers, according to a press release from the state agency. The ban also applies to the employees of Harbinger Capital Partners.

A representative for Falcone did not immediately respond to a request for comment.

Falcone admitted wrongdoing and agreed to pay an $18 million fine to the U.S. Securities and Exchange Commission in August to settle civil fraud charges that he improperly used Harbinger hedge fund money and favored some of his investors.

The agreement was the first to require a defendant to admit wrongdoing since SEC Chairman Mary Jo White announced a much tougher policy in June that would require such admissions more often.   Continued...

 
Philip Falcone, chief executive officer and chief investment officer for Harbinger Capital Partners, participates in a panel discussion during the Skybridge Alternatives (SALT) Conference in Las Vegas, Nevada in this May, 9, 2012 file photo. REUTERS/Steve Marcus/Files