Falcone's Harbinger Capital (HRG) Gets SEC 'Wells Notice'

December 9, 2011 9:15 AM EST
On December 8, 2011, Harbinger Capital Partners LLC (NYSE: HRG) and certain of its affiliates, including Philip A. Falcone, Omar Asali, and Robin Roger, received "Wells Notices" from the staff of the United States Securities and Exchange Commission. Investment funds managed by HCP are our controlling stockholders. Mr. Falcone is our Chief Executive Officer and Chairman of our Board of Directors. Mr. Asali is our Acting President and a member of our Board of Directors and Ms. Roger is a member of our Board of Directors.

The Wells Notices were not addressed to the Company or any of its subsidiaries (including Spectrum Brands Holdings, Inc.) and the matters described in the Wells Notices do not include any conduct involving, by, or on behalf of the Company or any of its subsidiaries (including Spectrum Brands Holdings, Inc.).

The Wells Notices state that the staff intends to recommend or is considering recommending that the Commission file civil injunctive actions against HCP, Harbinger Capital Partners Offshore Manager, LLC, Harbinger Capital Partners Special Situations GP, LLC, Mr. Falcone, Mr. Asali, and Ms. Roger alleging violations of the federal securities laws’ anti-fraud provisions in connection with matters previously disclosed and an additional matter regarding the circumstances and disclosure related to agreements with certain fund investors.

A Wells Notice is an indication of the current views of the staff of the Division of Enforcement, prior to a decision by the Commission. It does not constitute a determination that the recipients have violated any law. Should the Commission accept the recommendations of the staff, the Commission could seek a range of possible remedies, including permanent injunctive relief, a cease-and-desist order, censure, a bar (as to the individuals) from association with an investment adviser, investment company, and/or broker-dealer, disgorgement, pre-judgment interest, and/or civil penalties. It is not possible at this time to predict the outcome of these investigations, including whether or when any proceedings might be initiated or whether the matters will result in settlements on any or all of the issues involved.

HCP and its affiliates are disappointed that the staff issued Wells Notices in these matters. Except with respect to certain previously disclosed matters regarding Rule 105 of Regulation M, they strongly disagree with the staff that any violation of federal securities laws occurred and, in accordance with SEC procedures, plan to submit responses explaining why they believe enforcement actions are unwarranted. If the SEC decides to bring an enforcement action, HCP and its affiliates intend to vigorously defend against it.

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