Philip Falcone to Leave Harbinger Group

Features Dow Jones Newswires

Harbinger Group Inc. said Chairman and Chief Executive Philip Falcone will resign Dec. 1 and is expected to dedicate his efforts to his hedge fund.

Continue Reading Below

He will receive a lump-sum payment of about $20.5 million and will also focus on HC2, a wholesale service provider of fixed and mobile network operators.

Mr. Falcone became chief executive of Rochester-based Harbinger--which operates through companies that offer life insurance and offer branded consumer products--in July 2009, and is chief investment officer and chief executive of hedge fund Harbinger Capital Partners LLC.

Independent board member Joseph S. Steinberg will become chairman of Harbinger Group, and the company will launch a search for a new chief executive.

Keith Hladek, a Harbinger Group director, will also resign from the board to work on HC2 and Harbinger Capital.

U.S. securities regulators accused the hedge-fund manager in 2012 of putting his own interests, including Manhattan townhouses, a security detail and other trappings of a "lavish lifestyle," ahead of investors in his firm.

Continue Reading Below

He admitted wrongdoing as part of a civil settlement with securities regulators last year. Under that deal, his firm agreed to pay more than $18 million and he was banned from the securities industry for at least five years.

Mr. Falcone became one of the investing stars of the financial crisis after anticipating the housing collapse, and at one point managed $26 billion. But starting in 2008, the firm began to suffer steep losses. He invested billions in an ambitious wireless venture, LightSquared Inc., which has been mired in bankruptcy proceedings.

Mr. Falcone resigned in June from the board of LightSquared, which sought Chapter 11 protection in May 2012 after federal regulators refused to clear its development of a wireless network, citing the network's potential to interfere with global-positioning systems.