Harbinger Capital, the aggressive fund behind a $7 billion (€5.1 billion) 4G network in the US, is under investigation by securities officials over a loan to CEO Philip Falcone.
The SEC and the US attorney’s office in Manhattan are investigating whether Harbinger properly disclosed a $113 million personal loan to Falcone in October last year, FT.com reported Monday.
Falcone said in an email to Bloomberg that the loan had been “documented and audited by outside accountants and legal advisers and was done in accordance with our documents.”
News of the probe follows the revelation last week that Harbinger had been
forced to assure investors that it had no plans to liquidate its main fund.
Goldman Sachs, the Blackstone Group and other investors are reported to have requested their money back in early October.
The fund - Harbinger Capital Partners Fund – slid 15% in value through to October 15, Bloomberg reported on the weekend. About 90% of the fund’s $3.4 billion in assets are wireless or other telecom investments.
Harbinger is the prime investor behind a planned US-wide hybrid LTE-satellite network, LightSquared.
LightSquared has issued a $7 billion network equipment contract to Nokia Siemens Networks and has spent $2.9 billion on spectrum, including $338 million for satellite spectrum paid to UK-based Inmarsat, in which it owns 28%.
Following a successful $850 million debt issue last month, LightSquared said it now has more than $2 billion in debt and equity.
However, CEO Sanjiv Ahuja has said the startup needs $5 billion to meet its plan to reach 92% of the US population by 2015.
Inmarsat’s stock fell 2.18% in early trading on the LSE today.