Minnesota Wild Minority Owner, Hedge Fund Fined $18M

Posted at: 08/21/2013 3:51 PM
Updated at: 08/22/2013 7:47 AM
By: Josh Rosenthal

You could say Minnesota Wild Minority Owner Philip Falcone, whose representatives say he owns about 30 percent of the team, is in the Security Exchange Commission's penalty box.

Falcone and his hedge fund, New York-based Harbinger Capital Partners, agreed to a settlement in which they'll pay an $18 million fine.

The SEC fined Falcone for a few different reasons, but here's the big one: basically, he's admitted to borrowing client's money to pay his own taxes.

As University of St. Thomas Finance Professor David Vang explained it, "imagine at a smaller scale, it's your own personal stock broker and you found out after the fact that he was borrowing funds in your account to pay his taxes to get through the year with the hope that he was going to pay you back in time. If you had known, I mean if he had asked you, you probably would've said no."

Falcone's representatives emailed 5 Eyewitness News a statement, reading in part, "I believe resolving these issues is the best course of action for me and our investors."

We reached out to the Wild too. They told us the team "does not have any relationships with Mr. Falcone's hedge fund or other businesses. [The SEC settlement] does not affect the Minnesota Wild in any way."

NHL Commissioner Bill Daly released the following statement: "We don't have any immediate reaction. We will look at the settlement and talk to Mr. Falcone before deciding what effect, if any, these developments will have on Mr. Falcone and/or his minority ownership position in the NHL."

Falcone has also been barred from the securities industry for at least the next five years. Vang says that could end up being an even larger financial hit for Falcone than the $18 million fine.