Harbinger Capital Partners Investigation

Harbinger Capital Investigation

Harbinger Capital Partners Reportedly Under Investigation

Harbinger Capital Partners is one of the most prominent hedge funds in the world, after making big gains during the sub-prime mortgage crisis. According to the Wall Street Journal, the Securities and Exchange Commission and the U.S. Attorney's office have opened up an investigation into the hedge fund.

The investigation is centered on whether the fund notified investors quickly enough of a loan extended to the hedge fund's founder, Philip Falcone. Additionally, the investigators are looking into whether the allowed some investors to withdraw money at a moment when other investors were not able to.
Authorities are also probing whether the fund allowed some investors to withdraw money at a time when others were not allowed to because the fund was struggling. Falcone told the Journal in an interview that Harbinger did not give preferential treatment to certain investors.

Hedge funds are pools of money invested by wealthy individuals and institutions like pension funds and endowments. They are only lightly regulated but have come under increasing scrutiny in recent years.

In 2007, Harbinger bet against bonds that were used to finance subprime mortgages and posted huge gains when those bonds fell in value. But it began to struggle in 2008 and tightened rules about when and how much money investors could withdraw.

The loan to Falcone was backed by the $2 billion he has invested in the fund, the Journal reported. Source

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