The U.S. Securities and Exchange Commission announced Monday that it settled charges against billionaire activist investor Carl Icahn and his publicly traded company Icahn Enterprises L.P. IEP after regulators alleged that he failed to disclose billions worth of personal loans pledged against Icahn Enterprises’ securities.
What To Know: The SEC on Monday announced that Icahn and his firm agreed to pay $1.5 million and $500,000 in civil penalties to settle the charges. Icahn Enterprises shares were down more than 7% at last check.
Benzinga reached out to Icahn Enterprises for comment and received a response from both Icahn and Jonathan Streeter, outside counsel to Icahn Enterprises, stating that the settlement was a result of a “self-serving report” from Hindenburg Research.
"After Hindenburg issued a false report to make money on its short position at the expense of ordinary investors, the government investigation that followed has resulted in this settlement which makes no claim IEP or I inflated NAV or engaged in a ‘Ponzi-like' structure,” Icahn told Benzinga.
“Hindenburg's modus operandi, which is to publish scurrilous and unsupported allegations, did damage to IEP and its investors. We are glad to put this matter behind us and will continue to focus on operating the business for the benefit of unit holders."
According to the SEC, Icahn pledged approximately 51% to 82% of Icahn Enterprises’ outstanding securities as collateral to secure billions of dollars of personal margin loans under agreements with various lenders, starting in 2018. The billionaire investor allegedly failed to disclose the moves until 2022.
Regulators also alleged that Icahn failed to file amendments to securities filings describing his personal margin loan agreements and amendments dating back to at least 2005. The SEC added that Icahn’s failure to file required amendments persisted until at least July 9, 2023.
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"The federal securities laws imposed independent disclosure obligations on both Icahn and IEP. These disclosures would have revealed that Icahn pledged over half of IEP's outstanding shares at any given time," said Osman Nawaz, chief of the SEC Enforcement Division's Complex Financial Instruments unit.
"Due to both disclosure failures, existing and prospective investors were deprived of required information."
The SEC noted that Icahn and Icahn Enterprises agreed to cease and desist from future violations and to pay the aforementioned civil penalties without admitting or denying the allegations brought against Icahn and his firm.
“We are glad to put this matter behind us and will continue to focus on operating the business for the benefit of unit holders,” Icahn told Benzinga in a statement.
IEP Price Action: Icahn Enterprises shares were down 7.04% at $15.78 at the time of publication, according to Benzinga Pro.
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