Falcone leaves one Harbinger vehicle for another

Philip Falcone, the former hedge fund manager banned from the securities industry last year, has quit as chief executive of stock market-listed Harbinger Group, saying he plans to spend more time with the rest of his family of investments. The company, whose portfolio of businesses spans oil and gas, insurance and lending, and kitchen appliances including the George Foreman grill, said it will pay Mr Falcone $20.5m in severance, on top of a $19.8m bonus for the past 14 months of work.
In a statement, the company said Mr Falcone planned to concentrate on a more recent acquisition vehicle called HC2 Holdings, which has been expanding in telecoms, biotech and steel production.
He will also spend more time on his old hedge fund, Harbinger Capital Partners, which is fighting to salvage value from its investment in LightSquared, a bankrupt telecoms group Mr Falcone once hoped could build a 4G wireless network in the US.
Under the terms of a settlement with the US Securities and Exchange Commission last year, Mr Falcone admitted misusing Harbinger Capital customers' funds to pay his personal taxes, unfairly favouring certain larger clients, and manipulating the bond market.
He and the hedge fund paid $18m in fines and he was banned from the securities industry until 2018. However, he was allowed to assist in winding down the fund and was not banned from sitting on the boards of public companies.
HC2 was renamed from PTGi earlier this year, taking the initials of Harbinger Capital, and recently raised $250m in debt finance to fund more acquisitions. Its shares trade on the over-the-counter market in the US and Harbinger Group is a 26.4 per cent shareholder, according to the HC2 website.
Harbinger Group, meanwhile, did not immediately name a replacement chief executive, but Joseph Steinberg, founder of the investment company Leucadia National, which owns 19.6 per cent of Harbinger, will take over Mr Falcone's role as chairman.
Mr Steinberg lauded Harbinger's "significant growth and success" since Mr Falcone first became involved in 2009. Its market capitalisation has risen from $140m to $2.6bn since then.
Mr Falcone was once one of the most high-profile and powerful hedge fund investors in the world, managing more than $25bn. He personally made $1.7bn in 2007 betting on the housing bust, but the LightSquared debacle and SEC investigation left him attempting to reinvent himself in the public markets.

FT.com, 2014-11-25