Carl Icahn’s company stock falls as much as 20% after prosecutors seek financial information

Shares in Carl Icahn’s conglomerate Icahn Enterprises fell again on Wednesday following disclosures that federal investigators were seeking information about its corporate governance.

The stock was down 20% in early trading after falling nearly 25% last week. The U.S. Attorney’s Office for the Southern District of New York contacted Icahn Enterprises last Wednesday seeking information on corporate governance, capitalization, securities offerings, dividends, valuations, marketing materials, due diligence and other materials, according to a regulatory filing.

Investigators sought the information a day after prominent short seller Hindenburg Research took a short position in Icahn’s company. Hindenburg claimed last Tuesday to “inflate” asset valuations, among other reasons, because the publicly traded holding company’s stock is said to carry an unusually high premium to net asset value.

“The U.S. Attorney’s Office has brought no claims or charges against us or Mr. Icahn in connection with the investigation described above,” Icahn Enterprises said in its 10-Q filing.

In a separate statement, the company called Hindenburg’s report “misleading and self-serving,” saying the company, led by Nathan Anderson, used tactics that “wanted property destruction and harmed innocent civilians.”

“Mr. Anderson’s modus operandi was to launch a disinformation campaign to distort the company’s image, damage its reputation and deplete individual investors’ hard-earned savings,” Icahn Enterprises said. “However, unlike many victims, we will not stand idly by. We intend to take all appropriate steps to protect our unitholders and fight back.”

Icahn is history’s most famous corporate raider, rising to fame after his hostile takeover of TWA Airlines in the 1980s, stripping the company of its assets.Recently, the billionaire investor got involved in activist investing McDonald’s and biotech companies illumination.

Headquartered in Sunny Isles Beach, Florida, Icahn Enterprises is a holding company with investments in a variety of industries including energy, automotive, food packaging, metals and real estate.

Patrick Gardson, co-director of the shareholder activism practice at Vinson & Elkins, said Icahn has several ways to fight back and contain the resulting damage.

“He could create a floor for the stock by lowering the outstanding share count through share buybacks or unit buybacks,” Gardson told CNBC. “That might help stabilize the stock price, but it would be painful for the shorts.”

Additionally, the possibility of a high-profile third-party investor coming out in support of Icahn could also improve investor sentiment, Gardson said.

Icahn said his company’s performance has been below historical averages, largely because it has been bearish on the market.

“We’ve recently taken steps to reduce the short position in our hedge book and have focused most of our efforts on activism that has worked very well for us in the past,” Icahn said. “We believe our existing portfolio has considerable potential over the next few years. upside potential.”

shares Icahn Enterprises It is down more than 35% so far this year.