SEC Denies Whistleblower Award Claim for Harbinger-Falcone Recovery

As recently reported by Ed Benson of Law 360, on July 4th, 2014, the United States Securities and Exchange Commission (the “SEC” or “Commission”) issued a final order that denied a whistleblower award claim on the $18 million that the SEC recovered in a settlement agreement with Harbinger Capital Partners LLC (“Harbinger”) and the company’s chief executive Philip Falcone (“Falcone”).

In August of 2013, Harbinger and Falcone admitted to multiple acts of misconduct in order to settle an SEC suit for market manipulation in bond trading. In addition, Falcone admitted that he failed to disclose a $113 million loan from a fund affiliated with Harbinger, and he agreed to a five-year securities industry ban. The Harbinger and Falcone settlement marked one of the first recoveries under the SEC’s new policy that requires certain enforcement targets to admit or deny wrongdoing before the Commission will agree to a settlement.

The SEC denied the only whistleblower award claim that it received in response to the Harbinger-Falcone Notice of Covered Action. Pursuant to Rule 21F-10, the Commission adopted the recommendation of its Claims Review Staff, which determined that the Claimant failed to provide information that led to the Commission’s enforcement action. In addition, the Commission determined that the Claimant failed to provide information in the form and manner prescribed by Rule 21F.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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