Carl Icahn, billionaire activist investor, waits for Donald Trump, president and chief govt of Trump Group Inc. and 2016 Republican presidential candidate, not pictured, to talk at an election evening occasion in New York, U.S., on Tuesday, April 19, 2016.
Victor J. Blue | Bloomberg | Getty Photographs
The Securities and Change Fee on Monday mentioned it had fined billionaire activist investor Carl Icahn and his firm $2 million, settling allegations that he didn’t disclose billions of {dollars} value of private margin loans pledged towards the worth of his Icahn Enterprises inventory.
Icahn and the publicly-traded firm that bears his identify settled these expenses with out admitting or denying wrongdoing. They agreed to pay $500,000 and $1.5 million in fines, respectively, the SEC mentioned in a press launch Monday.
The SEC mentioned that Icahn, who made a repute as a ruthless company raider earlier than adopting the friendlier mantle of activist investor, pledged anyplace from 51% to 82% of Icahn Enterprises, or IELP, shares excellent to safe billions value in margin loans with out disclosing to shareholders or federal regulators.
Icahn’s cumulative private borrowing was as a lot as $5 billion, in accordance with an SEC consent order.
Because the efficient controlling shareholder of IEP, Icahn would have been anticipated to make what are generally known as Schedule 13D filings, which usually element what a management shareholder expects to do with their affect over an organization but additionally would have needed to embody details about any encumbrances, like margin loans, on a stake.
“The federal securities legal guidelines imposed impartial disclosure obligations on each Icahn and IEP,” mentioned Osman Nawaz, a senior SEC official. “These disclosures would have revealed that Icahn pledged over half of IEP’s excellent shares at any given time.”
The SEC mentioned Icahn didn’t disclose the margin borrowing through 13D till July 2023. A spokesperson for Icahn didn’t instantly return a request for remark.
Icahn’s margin borrowing was highlighted in a Might 2023 report issued by short-seller Hindenburg Analysis, which put strain on Icahn Enterprises’ inventory after alleging that the holding firm was, amongst different issues, not estimating the worth of its holdings appropriately.
Icahn consolidated and amended his margin borrowings in July, two months after the Hindenburg report, in accordance with the SEC’s consent order.
Icahn, 88, nonetheless strikes concern into boardrooms and C-suites regardless of formally handing off the reins earlier this yr. In February, JetBlue introduced a settlement cope with the activist investor which gave him two board seats, simply days into a brand new CEO’s tenure.
