The authority said it filed enforcement actions in June 2012, alleging that Falcone used $113 million in Harbinger fund assets to pay his personal taxes; favoured certain customer redemption requests at the expense of others; and conducted an improper "short squeeze" in bonds issued by a Canadian manufacturing company.

Falcone, who made a fortune by speculating on the collapse of the US sub-prime mortgage market, has agreed to be barred from the securities industry for at least five years, it added. 

Falcone and Harbinger yesterday admitted to “multiple acts of misconduct” which the authority said “harmed investors and interfered with the normal functioning of the securities markets.”

The settlement, which has yet to be approved by the US District Court for the Southern District of New York, requires Falcone to pay $6,507,574 in disgorgement; $1,013,140 in prejudgment interest; and a $4 million penalty. The Harbinger entities must pay a $6.5 million penalty. 

The securities industry bar against Falcone, meanwhile, will allow him to assist with the liquidation of his hedge funds under the supervision of an independent monitor, the SEC said.