(DCWatchdog.com) – In a scandalous revelation, billionaire investor Carl Icahn and his company, Icahn Enterprises LP (IEP), are facing charges from U.S. regulators for not disclosing billions in personal loans.
The Securities and Exchange Commission (SEC) revealed that IEP and Icahn have agreed to pay $1.5 million and $500,000 in civil penalties to settle the charges.
Since December 31, 2018, Icahn has used IEP securities—pledging between 51% and 82% of them—as collateral for billion-dollar personal margin loans.
The SEC noted that IEP did not report these pledges in its annual report until February 2022, and he did not make the required amendments to filings until July 2023.
Without admitting or denying the SEC’s findings, both Icahn and IEP agreed to stop future violations and pay the fines.
Moreover, this settlement comes after Hindenburg Research, a well-known short-seller, published claims about IEP 15 months ago. They accused the company of inflating its asset values and using a “Ponzi-like” scheme to pay dividends.
The billionaire fired back at Hindenburg, calling their report “false” and accusing them of trying to profit from a drop in IEP’s stock. Icahn said the settlement “makes no claim IEP or I inflated [net asset value] or engaged in a ‘Ponzi-like’ structure.”
Osman Nawaz, Chief of the SEC’s enforcement division’s complex financial instruments unit, stated, “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. Due to both disclosure failures, existing and prospective investors were deprived of required information,” he continued.
Icahn responded, “Hindenburg’s modus operandi, which is to publish scurrilous and unsupported allegations, did damage to IEP and its investors…”
Hindenburg, however, defended its report, stating that Icahn “rightly got charged by the SEC for failing to disclose details of his massive margin loan.”
Jonathan Streeter, an attorney for Icahn Enterprises, said:
“More than a year ago, Hindenburg published a self-serving report that made false and totally irresponsible allegations IEP inflated its net asset value and had ‘Ponzi-like’ dividends. The government investigated these claims and IEP and Carl Icahn fully cooperated.”
“In short, the government found absolutely no fraud and did not find any inflation of IEP’s NAV [net asset value] or impropriety in its dividends. Instead, IEP is settling an unrelated disclosure violation on issues that were reviewed by outside advisors at the time in question,” he concluded.
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