Robin Roger, the top lawyer at Harbinger Capital Partners, and the hedge fund’s chief, Philip Falcone, received Wells Notices from the Securities and Exchange Commission this week, indicating that they may be charged with violations of U.S. securities laws.
While SEC actions against financial firms have appeared in the news at a fairly regular clip, it’s a bit of surprise to see a firm’s general counsel named in a Wells Notice. According to a Reuters report:
The fact that Falcone’s chief lawyer is among those targeted struck some on Wall Street as unusual.
“It is extremely rare to see the SEC go after a lawyer,” said one general counsel at a hedge fund who declined to be named because he is not allowed to speak to the media.
He said the SEC move is an indication that general counsels are not immune from regulatory scrutiny, adding that many hedge funds’ in-house lawyers make sure they are covered by director and officers insurance.
The hedge fund general counsel noted that it is unlikely regulators would go after a lawyer for simply giving bad legal advice.
Part of the SEC’s investigation into Harbinger is already publicly known. The Washington Post reports that “one focus of the SEC probe is a loan of more than $100 million that one of the Harbinger funds made to Falcone in 2009. . . Harbinger disclosed months ago that the SEC and the Justice Department were investigating a loan to Falcone. Falcone borrowed the money to pay taxes and has since repaid it.”
However, the Well Notice is vague about the full scope of the SEC’s interest in Harbinger. The Post report says, “The Friday regulatory filing gave only a vague description of the other matter under SEC investigation, and the Harbinger spokesman would not elaborate. According to the filing, it involves ‘the circumstances and disclosure related to agreements with certain fund investors.’ “
Roger has served as Harbinger GC since 2009, following in-house stints with Morgan Stanley and the Moore Capital Management hedge fund. In addition to Roger and Falcone, a third Wells Notice also went to Omar Asali, Harbinger’s president.
