Falcone's Harbinger Not Scrambling to Meet Redemptions: Source

NEW YORK (TheStreet) -- Harbinger Group(HRG) , a holding company majority owned by Philip Falcone's struggling hedge fund Harbinger Capital Partners is trading nearly 27% lower after the company announced a secondary offering on Thursday of 20 million shares at a price of $7.50.

While the offering states that three Harbinger Capital hedge funds are the selling shareholders, a source familiar with the situation denies that the sales are a reaction to investor redemptions. Instead, the share sale is part of a long-term plan to increase Harbinger Group's public float on the New York Stock Exchange, the source argued.

Falcone is chief executive of Harbinger Group, a holding company with assets spanning from with consumer products and retail, insurance and natural resources, among a diverse set of operations. He also continues to head Harbinger Capital Partners, the hedge fund he founded in 2001 that has been under investor and regulatory scrutiny for the past year.

Prior to Harbinger Group's Thursday share offering, Harbinger Capital funds held over 90% of the company's shares, according to Securities and Exchange Filings compiled by Bloomberg.

In May, Harbinger Capital Partners put LightSquared, a multi-billion dollar 4G wireless investment, into bankruptcy.

In June, the Securities and Exchange Commission charged Falcone and Harbinger Capital Partners with fraud, market manipulation and betraying clients in a June 27 civil suit.

On Dec. 1, Falcone asked a federal judge to dismiss those charges, which alleged that he'd taken an illegal $113 million personal loan from the fund in 2009 to cover personal finances. The fund was also charged by the SEC with manipulating a short squeeze on MAAX Holdings, another claim Falcone and Harbinger are seeking to dismiss.

Harbinger Capital Partners swelled to over $26 billion in the wake of a timely bet against the U.S. subprime mortgage market prior to the housing bust; however, recent reports indicate the fund's assets have declined to $6 billion amid fund losses and investor outflows.