SEC fines Carl Icahn $2M for $5B loan disclosure failures
9:03 AM EDT, August 21, 2024
The U.S. Securities and Exchange Commission (SEC) has fined well-known investor Carl Icahn and his company $2 million for disclosing information irregularities about loans secured by shares. Hindenburg Research revealed the 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 own company, Icahn Enterprises (IEP). The Commission claims that the value of these hidden loans reached as much as $5 billion.
A detailed SEC investigation revealed that Icahn pledged between 51% and 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.
Osman Nawaz, a senior SEC official, emphasized that the obligation to disclose this information rested with both Icahn and his company, according to CNBC.
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 neither the billionaire nor his company admitted guilt, they agreed to pay the imposed fines. This issue came to light following a report by Hindenburg Research in May 2023.
The market reaction was immediate. Icahn Enterprises (IEP) shares fell by 6 percent on the day the SEC decision was announced. Carl Icahn issued a statement saying, "We are pleased to put this matter behind us and focus on conducting business for the benefit of shareholders."
Hindenburg Research criticizes Icahn
The research and investment firm Hindenburg Research took a stance on the businessman. In May of last year, they revealed irregularities in the disclosure of loans provided by Icahn's company.
According to researchers, Icahn Enterprises "operates in a structure similar to a Ponzi scheme." Hindenburg Research also emphasizes that the billionaire's company lost nearly $1 billion just in the last quarter.
