Billionaire activist investor Carl Icahn waits for Donald Trump (not pictured), President and CEO of The Trump Organization and 2016 Republican presidential candidate, on Tuesday, April 19, 2016 in New York, United States Speech at an election night event held.
Victor J. Blue | Bloomberg | Getty Images
The U.S. Securities and Exchange Commission said on Monday it had fined billionaire activist investor Carl Icahn and his companies $2 million to resolve allegations that he failed to disclose billions of dollars worth of personal collateral pledged against the value of his Icahn Enterprises stock. Margin Loan Charges.
Icahn and the public company that bears his name have settled the allegations without admitting or denying wrongdoing. The SEC said in a news release Monday that it agreed to pay fines of $500,000 and $1.5 million, respectively.
The SEC said Icahn pledged to hold 51% to 82% of the outstanding shares of Icahn Enterprises (IELP) to obtain margin loans worth billions of dollars without disclosing it to shareholders or federal regulators.
According to the U.S. Securities and Exchange Commission (SEC), Icahn’s cumulative personal borrowings amount to $5 billion consent order.
As IELP's de facto controlling shareholder, Icahn is expected to file a so-called Schedule 13D document, which typically details how the controlling shareholder hopes to use its influence over the company, but must also include information about any encumbrances, like a margin loan. Same, based on equity.
“Federal securities laws impose independent disclosure obligations on Icahn and IEP,” said Osman Nawaz, a senior SEC official. “These disclosures indicate that Icahn was committed to more than half of IEP's outstanding shares at any given time.”
The SEC said Icahn did not disclose the margin borrowed through 13D until July 2023.
Icahn's margin borrowing issues were highlighted in a May 2023 report from short-seller Hindenburg Research, which accused the holding company of not properly estimating the value of its holdings, giving Icahn Enterprises stocks bring pressure.
According to the SEC consent order, Icahn consolidated and modified his margin borrowings in July, two months after the Hindenburg report was released.
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