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$26 billion hedge fund magnate Falcone goes tits up

D

dmcowen674

No Lifer
5-14-2012

http://finance.yahoo.com/news/falcones-lightsquared-files-bankruptcy-182323779.html?l=1

Falcone's LightSquared files for bankruptcy


Hedge fund manager Philip Falcone's dream of bringing another wireless network to the United States appeared to collapse on Monday when LightSquared Inc, the ailing telecommunications company he bankrolled, filed for bankruptcy protection.

Only five years ago, Falcone had been crowned as one of the hedge fund industry's biggest stars thanks to a savvy bet against the overheated housing market which helped grow his Harbinger Capital Partners to about $26 billion in assets under management. By earlier this year that had shrunk to roughly $4 billion.


When Falcone was hot, hundreds of endowments and funds of funds plus wealthy individual investors flocked to his New York-based hedge fund in hopes he would soon repeat the triple digit gains from 2007.


Now Falcone, a former Harvard College hockey star, is being sued by at least one individual investor and other institutional investors who have not been able to get their money out as he locked down the portfolio to conserve cash. They acknowledge they are embarrassed to have been ensnared in what could become the year's biggest hedge fund collapse.
 
Lordie I hope the US Government isn't going to have to bail Falcone out too.

But that seems to be the hedge funds managers secret, if I bet right, I get to pocket the gains, if not, the Feds will bail me out and let me keep my bonus commissions too.

Let him go broke, let the people he scammed sue him down to the last dime, and if he somethings illegal, put him in jail and not some white collar prison either.
 
Lemon law said:
Lordie I hope the US Government isn't going to have to bail Falcone out too.

But that seems to be the hedge funds managers secret, if I bet right, I get to pocket the gains, if not, the Feds will bail me out and let me keep my bonus commissions too.

Let him go broke, let the people he scammed sue him down to the last dime, and if he somethings illegal, put him in jail and not some white collar prison either.
Click to expand...

I dont see anything any the article to suggest anything illegal happened. Sometimes people make bad investments.

In which case they should lose their investments.
 
Jaskalas said:
This is specifically tied to the FCC not allowing them to do the very thing they exist to provide.
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Because their scheme to use a satellite - to - ground only part of the spectrum for ground-level wireless didn't work, it broke GPS devices.

That's the FCC doing their job properly. People would complain very loudly if the FCC let LightSquared break car navigation systems and all the other GPS devices in use..
 
DaveSimmons said:
Because their scheme to use a satellite - to - ground only part of the spectrum for ground-level wireless didn't work, it broke GPS devices.

That's the FCC doing their job properly. People would complain very loudly if the FCC let LightSquared break car navigation systems and all the other GPS devices in use..
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How were they even able to acquire the spectrum? I thought they need to provide the FCC the plans for the use of the spectrum prior to the auction, and if it was going to be an issue, the whole purchase would never have been approved in the beginning.
 
Hugo Drax said:
How were they even able to acquire the spectrum? I thought they need to provide the FCC the plans for the use of the spectrum prior to the auction, and if it was going to be an issue, the whole purchase would never have been approved in the beginning.
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They disclosed their plans, and the FCC said roughly: that's probably not going to work, but you can try it if you want. If it passes enough testing then we'll let you do it.

As you might expect from hedge fund people they decided to go for the big gamble.

The tests showed it wouldn't work safely without messing up GPS, so the FCC didn't allow it.
 
Uhhh, I'm pretty sure Batman took down Falcone, not the FCC

FalconeBegins.jpg


Lightsquared was a POS network that wanted to use a loophole in frequency licensing to allow them to transmit at power levels so high, it would interrupt massive amounts of commercial GPS navigation in nearby frequencies. The FCC should never have even considered Lightsquared's proposals.

If you get within 0.66 miles of a LightSquared transmitter in open conditions, you’ll lose your position fix with the automotive nuvi 265W, further away in a city environment like New York or Chicago. The results are even worse for the aviation GPS. The FAA has essentially discontinued support for the old LORAN electronic navigation system in favor of GPS, and now LightSquared has proposed a system that essentially disables GPS in exactly the areas aviation needs it most. Garmin’s conclusion, shared by other industry proponents:

"The operation of so many high powered transmitters so close in frequency to the GPS operating frequency (1575.42 MHz) will create a disastrous interference problem to GPS receivers to the point where GPS receivers will cease to operate (complete loss of fix) when in the vicinity of these transmitters."

Other government agencies are also concerned. In a January 12th letter to the FCC, Lawrence Strickland, the head of the National Telecommunications and Information Administration (a branch of the Department of Commerce) wrote:

"Grant of the LightSquared waiver would create a new interference environment and it is incumbent on the FCC to deal with the resulting interference issues before any interference occurs. Several federal agencies with vital concerns about this spectrum band, including the Departments of Defense, Transportation and Homeland Security, have informed NTIA that they believe the FCC should defer action on the LightSquared waiver until these interference concerns are satisfactorily addressed."
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http://freegeographytools.com/2011/how-the-fcc-plans-to-destroy-gps-a-simple-explanation
 
senseamp said:
Stupid people complain about it. Regulation is an essential job of the government.
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Right on about FCC shouldn't allow it in the first place and on the comments above^

However, Falcone knew the risks and lost his gamble.

Anyone with a decent risk analyst could have told him not to blow 3 Billion on a bet of a vague FCC statement
 
senseamp said:
FCC shouldn't have agreed in the first place.
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No they shouldn't have, but that doesn't make it their fault. The idea that a system that interferes with commercial transportation, that not only affects safety but big $$$$, would ever get off the ground is laughable.
 
So a business idea failed. It would be pretty hard to have any innovation without some risk of failure.
 
senseamp said:
Sounds like they got screwed by the FCC who sold them unusable spectrum.
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Shouldn't the consumer know what the product is supposed to do before you buy it?

If you want to haul 40 tons from Florida to California, dont you think you should buy the right truck for the job? Is it the place of the sales person to tell you what truck you need?

If anything, it sounds like some poor advice on part of the engineers, or the upper management did not listen to the engineers.
 
sunzt said:
Right on about FCC shouldn't allow it in the first place and on the comments above^

However, Falcone knew the risks and lost his gamble.

Anyone with a decent risk analyst could have told him not to blow 3 Billion on a bet of a vague FCC statement
Click to expand...

That spectrum was fine for low power stuff, Falcone just overpaid because he thought he could make it work for high-wattage broadband.
 
Texashiker said:
Shouldn't the consumer know what the product is supposed to do before you buy it?

If you want to haul 40 tons from Florida to California, dont you think you should buy the right truck for the job? Is it the place of the sales person to tell you what truck you need?

If anything, it sounds like some poor advice on part of the engineers, or the upper management did not listen to the engineers.
Click to expand...

My understanding was that it worked with GPS devices that were FCC compliant, but failed because many (older?) GPS devices were not fully compliant and broke when LightSquare tried to use their spectrum.

So the engineers probably said looks like it will work (assuming the GPS devices are FCC compliant). Then they did the testing and turned out some GPS devices were not quite FCC compliant.
 
the problem was that all devices on that spectrum were very low power. lightsquared wanted to broadcast at very high power.

all the GPS devices were designed for low power and not what lightsquared wanted. they knew going in that everything on the neighboring frequencies was low power and the spectrum was so cheap because of that. they thought they could pay a few people off and get some rules changed but there is a lot more money opposing them
 
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