Falcone became on the country’s highest earning hedge fund managers because of his bet against subprime mortgages in 2007, but soon became mired in legal troubles.
Phil Falcone, the departing CEO and chairman of Harbinger Group.
Brendan Mcdermid / Reuters
The billionaire hedge fund manager Phil Falcone is leaving the conglomerate he attempted to build after making billions during the financial crisis and then being dragged through a years-long battle over a bankrupt wireless company.
Falcone's company, the Harbinger Group, announced Tuesday morning that Falcone would leave the company, effective December 1. Falcone was chairman and chief executive of Harbinger, he will be replaced as chairman by Joseph Steinberg, a member of the board. Harbinger did not announce a successor.
Falcone will be getting over $40 million for leaving the company — a $20.5 million one-time severance payment, his $16.5 million previously awarded bonus for 2014, and $3.3 million worth of a bonus for the 2015 fiscal year.
Falcone's net worth is $1 billion, according to Forbes. It was over $2 billion in 2011.
Falcone became famous for his prescient bet against subprime mortgages in 2007, but quickly faced losses in 2008 and some investors asked to pull money from his funds.
He then become mired in a long regulatory and legal fight over LightSquared, a wireless communications company majority owned by his fund, Harbinger Capital Partners. It was never able to operate after a 2012 Federal Communications Commission ruling which said that its network would interfere with GPS signals.
Falcone was then enmeshed in a long battle with Dish Network chairman Charlie Ergen over ownership of the company after it filed for bankruptcy in 2012. Harbinger Group owns a variety of consumer brands like Black & Decker and George Foreman grills, as well as a Baltimore-based reinsurance company Fidelity and Guaranty Life and Bermuda-based reinsurer FrontStreet Re. Falcone had previously said that he wanted to move away from hedge fund trading and instead invest long term in companies through Harbinger.
"During Mr. Falcone's tenure as Chairman and Chief Executive Officer, the Company experienced significant growth and success, beginning as a company with approximately $140 million market capitalization in 2009 rising to today's market capitalization of approximately $2.6 billion," Steinberg said in a statement.
"We thank Phil for his many years of hard work and leading HGI."
In August of last year, the Securities and Exchange Commission imposed a five year ban on managing outside investor money for Falcone following a settlement over accusations that he had borrowed money from the fund to pay his personal taxes in 2009 and prevented investors from getting money out of the fund. Harbinger and Falcone also had to pay an $18 million fine.
Falcone, however, was still allowed by the SEC to maintain his affiliation with various Harbinger entities, including Harbinger Capital Partners. In a statement, Harbinger Group said Falcone Keith Hladek, a director that will also resign, "are expected to dedicate their efforts to HC2 Holdings, Inc. and Harbinger Capital Partners." HC2 Holdings invests in telecommunications, undersea cable, steel, and other comapnies. Falcone is the company's chairman.
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