Goldman To Pull Investment From Falcone Hedge Fund

Goldman Sachs GS, the most profitable Wall Street bank, is reportedly planning to pull its entire $120 million investment in Philip Falcone's main hedge fund due to lagging returns and the revelation that Falcone borrowed money from a smaller fund that had suspended client redemptions. Falcone took a loan from Harbinger Capital Partners Special Situations Fund in October 2009 to pay personal taxes while investors were barred from redemptions because the fund had assets involved in the Lehman Brothers bankruptcy, Bloomberg News reported. The Harbinger Capital Partners Fund was down 15% as of mid-October and investors have voiced concerned about the fund's concentration in illiquid investments, Bloomberg reported. Goldman declined to comment on the pulled investment. Harbinger investors can only pull 25% of their total investment per quarter, so Goldman will have to spread its departure out over four quarters at a pace of $30 million per quarter. Goldman's withdrawal process will be complete in January 2012.