- Last Updated: 12:50 PM, June 27, 2012
- Posted: 12:56 AM, June 27, 2012
Hedge-fund honcho Phil Falcone is about to take the gloves off in his ongoing battle with federal regulators.
Following a two-year probe and broken-down settlement talks, the Securities and Exchange Commission is gearing up to file civil fraud charges against the former college hockey player, The Post has learned.
“Needless to say, I am going to vigorously contest,” Falcone told The Post in an e-mail. He also blasted the SEC for allegedly leaking news of the civil suit.
The corporate watchdog has been investigating Falcone, founder of Harbinger Capital Partners, since 2010 over $113 million he borrowed from one of his funds in 2009 to pay his taxes.
When recent efforts to settle that and other matters fell apart, the SEC informed Falcone through his lawyer that it will be moving forward with its lawsuit, according to sources.
A spokeswoman for the SEC declined to comment.
In addition to the loan, the SEC will accuse Falcone of giving certain investors of his hedge fund, including Goldman Sachs, preferential treatment on withdrawals, according to sources with knowledge of the investigation.
The agency may also accuse Falcone of market manipulation tied to trading in bonds of Maax Holdings, a Brooklyn Park, Minn., maker of bathroom fixtures.
Falcone is expected to argue that he sought and received the OK to borrow the $113 million by outside legal counsel, and that he repaid the loan at above-market interest rates, a person familiar with the investigation told The Post.
On the withdrawal treatment given to Goldman, Falcone may argue that it was permitted by the fund documents and offering materials.
He will also deny manipulating Maax Holdings’ bonds, a trade Harbinger lost money on, sources said.