Peter A. Jenson (“Jenson”), the former Chief Operations Officer of Harbinger Capital Partners, LLC (“Harbinger”), has agreed to settle fraud charges with the Securities and Exchange Commission (“SEC”) for aiding Harbinger’s owner, Phillip A. Falcone (“Falcone”), in the misappropriation of client funds. This settlement helps resolve charges originally brought forth in a 2012 enforcement action by the SEC against Jenson, Falcone and Harbinger.
The scheme involved Jenson assisting Falcone with misappropriating funds to pay Falcone’s personal taxes through a loan. Jenson admitted to five (5) instances of wrongdoing including failure to disclose the existence of the loan to investors and failing to ensure the loan was consistent with Falcone’s fiduciary duties to the lender Harbinger Capital Partners Special Situation Fund.
Jenson admitted to wrongdoing and will be ordered to pay a $200,000 penalty . He also is banned from working in the securities industry and practicing as an accountant for any publicly traded company for at least two years. Julie Riewe, co-chief of the SEC Enforcement Division’s Asset Management Unit, stated “This settlement shows that we hold accountable not only those who perpetrate a scheme, but also those who enable them.”
The admission of wrongdoing in this case is significant and reflects the SEC’s new stance of wanting defendants to admit their wrongdoings, rather than to “neither admit nor deny” as part of settlement terms.
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