Former Officer of Harbinder to Settle Charges In Hedge Fund Scheme
On July 28, 2014, the Securities and Exchange Commission (the “SEC”) announced that the former chief operating officer at Harbinger Capital Partners LLC agreed to settle charges that he assisted a scheme by Philip Falcone to misappropriate millions of dollars from the hedge fund. According to the SEC, the funds were used to pay Falcone’s personal taxes.
Peter Jenson, who was charged along with Falcone and Harbinger in a 2012 enforcement action by the SEC, has agreed to admit wrongdoing and pay a $200,000 penalty.
Jensen agreed to be prohibited from working in the securities industry for at least two years, and agreed to be suspended from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC. The settlement must be approved by the court.
Falcone and Harbinger consented to a settlement last year in which they agreed to pay more than $18 million and admit wrongdoing.
“Jenson assisted a fraudulent scheme that allowed Falcone to put his own interests ahead of investors by engaging in a related party loan on favorable terms,” said Julie M. Riewe, co-chief of the SEC Enforcement Division’s Asset Management Unit. “This settlement shows that we hold accountable not only those who perpetrate a scheme, but also those who enable them.”
In his settlement, Jenson admits that with knowledge of Falcone’s and Harbinger’s violations, he provided substantial assistance in connection with the loan by failing to:
• Ensure that the lender (Harbinger Capital Partners Special Situations Fund) had separate counsel.
• Ensure that the loan was consistent with Falcone’s fiduciary obligations to the Special Situations Fund.
• Ensure that Falcone paid an “above market” interest rate on the loan.
• Timely disclose the loan to investors.
• Take actions to cause the lender to accelerate Falcone’s payment on the loan once investors in the Special Situations Fund were permitted to begin redeeming their investments.
For further information about this article, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, [email protected] or visit www.securitieslawyer101.com. This memorandum is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or [email protected]. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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