Harbinger Capital Partners, one of the most prominent hedge funds in the United States, is the latest fund to become the subject of an SEC investigation, according to a recent Wall Street Journal article. The SEC's recent renewed enforcement efforts have meant that many hedge funds have come under increased scrutiny by regulators. Of particular interest to regulators are the funds' trading and valuation practices.As reported by the article, federal authorities are now investigating allegations that Harbinger gave illegal preferential treatment to its founder, Philip Falcone, and several clients. Allegedly, Harbinger extended a $113 million personal loan to Falcone out of a fund with $2.5 billion in assets, from which investors were prohibited from withdrawing funds. Investor complaints have also arisen that Harbinger failed to disclose the loan to the fund's investors within a reasonable time frame.The SEC's investigation also seeks to uncover whether Harbinger's withdrawal terms are the same for all customers. Allegations have arisen that the fund preferentially allowed a few clients to withdraw money after the financial crisis hit in 2008 while it prohibited all other clients from doing so at that time. As reported in the WSJ article, Falcone has denied the allegations of preferential treatment to particular investors.Though the fund now manages approximately $9 billion in assets, it managed $26 billion in assets in 2008.According to the article, Harbinger's main fund has declined almost 15% this year.