One-time high-flying hedge fund manager Phil Falcone, plotting a comeback after a securities industry ban, told CNBC Tuesday he considers his integrity of “utmost importance,” and said he’s trusted by people who know him.
The Securities and Exchange Commission in 2012 charged Falcone with securities fraud. The charges included misappropriation of client assets and market manipulation at Harbinger Capital. He settled with the government for $18 million, and agreed to a five-year prohibition from the securities industry.
“I didn’t commit fraud. I didn’t violate securities laws,” Falcone told “ Squawk Box ” Tuesday. “It was a negligence. I pleaded to negligence.”
He said he’s legally unable to discuss the specifics of the case.
Calling it an “unfortunate circumstance,” he said the ordeal “may have been a sign of the times as to what we were going through post-the-crisis.” The SEC was in a “difficult position coming off the crash,” he said.
At one point, Falcone ran as much as $26 billion at his hedge fund. He made his fortune shorting subprime mortgages in 2006 heading into the financial crisis.
Right before closing Harbinger Capital, Falcone made a huge bet on wireless spectrum firm LightSquared, which ultimately contributed to Harbinger’s downfall.
Falcone told CNBC he’s looking to put all that behind him with a new venture called HC2 Holdings, a small publicly traded diversified holding company. HC2 has been structured, according to Falcone, as a “permanent capital vehicle,” designed to buy companies. He said he’s always liked the long-term view and the “more control aspect” of investing.
Asked if he would ever consider opening up another hedge fund when he’s allowed, Falcone said he put the “hedge fund aspect behind me.”
Commenting on the current investing climate, he said the difficult environment is going to lead to some big name investors being “filtered out” and closed down over the next six to 12 months. Without singling out anyone in particular, he said there are “too many people running funds right now” and ” too many funds around.”
Falcone on Monday touched on the 2016 stock market swoon in an interview at the Alpha Hedge East conference in Palm Beach Gardens, Florida. He said there were times in 2008 when it felt like “everything was going to collapse,” but he added, “I don’t have that feeling right now.”