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The SEC also said Falcone and Harbinger secretly gave some key investors in the fund the right to cash out of their holdings. In exchange, the favored investors gave Falcone and the fund permission to bar the other investors from being able to cash out, according to the SEC. It said that arrangement was hidden from Harbinger's directors. Last year, the SEC reached a settlement with Harbert Management Corp., a firm with ties to Harbinger. The SEC said Harbert had the power to control Falcone and Harbinger but failed to stop the bond manipulation scheme. Harbert and two related firms agreed to pay a $1 million civil fine. They, too, neither admitted nor denied wrongdoing. Harbinger Group's consumer products division includes Spectrum Brands, the company behind products such as Rayovac batteries and George Foreman grills.
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