Corporate Raider Icahn Fined $2M for Disclosure Failure

Activist investor Carl Icahn has spent decades attacking purported shortcomings of publicly traded companies, but on Monday he was on the other side of such disparagement, as he paid $2 million in penalties to the Securities and Exchange Commission.

Icahn, 88, failed to disclose that he had borrowed against his stake in his publicly traded company, Icahn Enterprises LP, in which he has an 85% controlling interest.

He pledged about two-thirds of his IEP units from 2018 to 2022 to several lenders, receiving up to $5.1 billion in personal margin loans, according to the SEC release. Icahn settled the charges without admitting or denying wrongdoing and agreed to pay $500,000 personally and $1.5 million from IEP in fines.

IEP, with a market capitalization of $7.7 billion, invests widely in areas ranging from energy to real estate.

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IEP stock has lost 68% of its value since short-seller Hindenburg Research charged in May 2023 that the famed investor had failed to make required disclosures. Icahn later filed an amended report to reflect his transaction. Upon the announcement of the fine payment Monday, Hindenburg has remained critical, writing on the social network X that IEP is “still operating a Ponzi-like structure” and added that it still is short the stock.

For his part, Icahn commented in a statement: “The government investigation that followed has resulted in this settlement which makes no claim IEP or I inflated NAV or engaged in a ‘Ponzi-like’ structure. 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 burst into public view in 1985 as a corporate raider, an investor who used borrowed money to take over companies and sometimes sell them for parts. His first such deal was Trans World Airlines in 1985, when he made a tidy profit by selling off its routes to other carriers. While many of his forays were profitable, he also had clunkers, such as a money-losing stake on car rental firm Hertz Global.