Falcone Harbinger Deal Below Market Price

Chidem Kurdas

Funds controlled by Philip Falcone sold some seven million shares of NYSE-listed holding company Harbinger Group at $11 a share on Monday. This is below the current market quote around $12.10. The 52-week market high was $13.25.

Mr. Falcone is liquidating his funds to return money to investors as per an agreement he made with the U.S. Securities and Exchange Commission to settle various charges. Harbinger stock is the main asset the funds own. He is under pressure from clients who have been waiting for years to get their money back.

Given these dire conditions, he has been disposing of Harbinger shares at prices that are surprisingly low, though not at fire sale levels. The most recent deal is better than prices he got in other sales.

In a previous transaction, he sold at $6.50 per share to the holder of a buy option, probably a brokerage or hedge fund such as Leon Cooperman’s Omega from which he borrowed money.

Before that, he sold another batch of shares at $7.75.

Mr. Falcone’s ongoing financial and legal problems started with a massive commitment he made to the wireless network LightSquared, which failed to get regulatory approval for its network and went bankrupt.

That left him strapped for cash. For close to five years he denied most redemption requests from his funds and tried to raise money by creating Harbinger Inc.

Regulators charged that he engaged in illegal trades, used clients’ money to pay his personal income tax and gave favorable redemption terms to certain investors to get their consent to restrict the redemption rights of others. A group of investors are suing.

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