Hedge Fund Manager to Admit to Wrongdoing in Revised Deal With S.E.C.

The hedge fund manager Phil Falcone has agreed to admit wrongdoing and to be banned from the securities industry for at least five years in a settlement that points to a more aggressive stance by the Securities and Exchange Commission under its new chairwoman, Mary Jo White.

The deal, which includes $18 million penalty, comes after the commission had overruled its own enforcement staff last month to reject an earlier settlement.

InJune 2012, federal regulators had accused Mr. Falcone of manipulating the market by improperly using $113 million in fund assets to pay his own taxes and to favor some customer redemption requests secretly over others, among other things. His actions, “read like the final exam in a graduate school course in how to operate a hedge fund unlawfully,” according to federal regulators.

Earlier this year the billionaire hedge fund manager announced that he had “reached an agreement in principle” with the regulator to pay the $18 million fine. It included a two-year ban for Mr. Falcone from raising new capital.

The terms of the settlement announced on Monday are much more severe than the earlier deal.

“Falcone and Harbinger engaged in serious misconduct that harmed investors, and their admissions leave no doubt that they violated the federal securities laws,” said Andrew Ceresney, co-director of the S.E.C.’s Division of Enforcement.

“Falcone must now pay a heavy price for his misconduct by surrendering millions of dollars and being barred from the hedge fund industry,” he added.

Mr. Falcone will be required to pay more than $11.5 million of his own money in disgorgement and penalty fines, while his Harbinger entities will have to pay $6.5 million.

For Mr. Falcone, who is currently engaged in two battles over LightSquared, a broadband company in bankruptcy he is fighting to maintain control over, the settlement appeared to be a positive turn of events.

He struck a more upbeat note than the regulator saying he was, “pleased that we were able to reach a settlement to resolve these matters with the S.E.C.”

“I believe putting these issues behind me now is the best course of action for me and our investors,” he said. “It will allow me to continue to focus on my permanent capital vehicles and maximizing the value of LightSquared for all stakeholders. I remain committed to managing Harbinger Capital’s portfolio of investments for the benefit of our investors.”

The settlement, which must be approved by the United States District Court in Manhattan, reflects a new push by the agency’s head, Ms. White, a former federal prosecutor and Wall Street defense lawyer. The agency has been criticized for allowing Wall Street firms to pay fines and settle allegations without admitting any wrongdoing.

In some cases, she said in a June interview with James B. Stewart of The New York Times, “in the interest of public accountability, you need admissions.”

“Defendants are going to have to own up to their conduct on the public record,” she added.

The S.E.C. is also said to pressing to obtain an admission of wrongdoing from JPMorgan Chase in a settlement over a multibillion-dollar trading loss last at a bank unit in London.