Billionaire Carl Icahn Settles with SEC Over Alleged Stock Pledge Concealment
The Securities and Exchange Commission (SEC) has fined billionaire investor Carl Icahn and his company $2 million, settling allegations that he failed to disclose billions of dollars in personal margin loans pledged against Icahn Enterprises’ stock. The settlement comes after a government investigation following a damning report by Hindenburg Research in May 2023.
Icahn, known for his aggressive investment strategies, and Icahn Enterprises (IEP) agreed to the fines—$500,000 for Icahn personally and $1.5 million for the company—without admitting or denying any wrongdoing. The SEC found that Icahn had pledged between 51% to 82% of IEP’s outstanding shares as collateral for personal loans, which at one point amounted to $5 billion. However, these pledges were not disclosed to shareholders or regulators as required.
The SEC emphasized that as the controlling shareholder of IEP, Icahn had a legal obligation to file Schedule 13D disclosures, which would have revealed the significant encumbrances on his stock holdings. These filings are crucial for providing transparency about a shareholder’s intentions and any financial arrangements that might affect their control over the company.
The SEC’s investigation was triggered by a report from Hindenburg Research, a short-seller that accused IEP of overestimating its asset values and running a “Ponzi-like” structure. Although Icahn amended and disclosed his margin borrowings in July, following the report, he maintained that neither he nor IEP had inflated their net asset values (NAV) or engaged in any Ponzi-like activities.
“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 stated. However, Hindenburg Research remains skeptical, reiterating its position that IEP continues to operate in a Ponzi-like manner and maintaining its short position on the stock.
This settlement highlights the critical importance of transparency and compliance with disclosure obligations, especially for influential figures like Icahn who wield significant control over publicly traded companies. As Icahn and his company move forward, the spotlight remains on their operations and governance practices.
