Billionaire hedge fund manager Phil Falcone was accused of using client funds to pay taxes and manipulating bond prices.
NEW YORK (CNNMoney) -- U.S. securities regulators on Wednesday charged billionaire hedge fund manager Philip Falcone and his Harbinger Capital with fraud.
The Securities and Exchange Commission claims that Falcone used client assets to pay $113 million in personal taxes, manipulated bond prices and played favorites with certain clients.
In addition, the SEC claims that Harbinger (HRG) made illegal stock trades in three initial public offerings.
"Today's charges read like the final exam in a graduate school course in how to operate a hedge fund unlawfully," said Robert Khuzami, director of the SEC's division of enforcement, in a statement.
The SEC also charged Harbinger's former chief investment officer, Peter Jenson, for "aiding and abetting" the misappropriation of fund assets.
Separately, the SEC settled charges with Harbert Management Corp., an affiliate of two Harbinger-related entities.
Harbinger agreed to pay $857,950 in an administrative proceeding for selling securities short during the "restricted period" before an IPO, and then purchasing the same securities in the offering.
Attorneys for Falcone and Harbinger did not immediately respond to requests for comment.
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