Icahn fined $2M for undisclosed $5B loans backed by IEP shares
The U.S. Securities and Exchange Commission (SEC) has fined well-known investor Carl Icahn and his company $2 million for disclosing information about loans secured by shares. Hindenburg Research uncovered these irregularities.
According to SEC findings, Carl Icahn, a well-known billionaire and investor, did not properly disclose information about significant personal loans. These obligations were secured by shares of his company, Icahn Enterprises (IEP). The Commission claims that the value of these undisclosed loans reached as much as $5 billion.
A detailed SEC investigation revealed that Icahn pledged 51% to 82% of IEP's shares as collateral for his loans. Such a significant burden on shares should have been reported in the appropriate regulatory documents, which Icahn did not do.
According to CNBC, Osman Nawaz, a senior SEC official, emphasized that Icahn and his company were both obligated to disclose this information.
Market reactions
As a result of the settlement with the SEC, Carl Icahn agreed to pay a penalty of $500,000, while his company, Icahn Enterprises, was fined $1.5 million. Although both the billionaire and his company did not admit guilt, they agreed to pay the fines. It is worth noting that this issue surfaced after a report by Hindenburg Research was published in May 2023.
The market's reaction to this information was immediate. Icahn Enterprises (IEP) shares fell by 6 percent on the day the SEC decision was announced. Carl Icahn issued a statement: "We are glad to put this matter behind us and will continue to focus on operating the business for the benefit of unit holders."
Hindenburg Research criticizes Icahn
The research and investment firm Hindenburg Research took a firm stance on the businessman. In May of last year, they exposed irregularities in disclosing loans provided by Icahn's company.
Researchers say Icahn Enterprises "operates in a structure similar to a Ponzi scheme." Hindenburg Research also emphasized that the billionaire's company lost nearly $1 billion in the last quarter.
