(Bloomberg) — Billionaire Carl Icahn and his investment firm have agreed to pay $2 million to settle a U.S. Securities and Exchange Commission investigation that found the legendary investor failed to properly disclose how much much was borrowing against his shares in the company.
Icahn is being fined $500,000 and Icahn Enterprises LP will pay $1.5 million in connection with failing to disclose how IEP units were pledged as collateral against his personal margin loans, according to an SEC filing Monday. The investigation began after a report by short seller Hindenburg Research sent shares to Icahn's investment firm.
The settlement agreement shows that the 88-year-old investor pledged up to 65% of his IEP units from 2018 to 2022. In exchange, he was given up to $5.1 billion in personal loans from various lenders.
“We are happy to put this matter behind us and will continue to focus on operating the business for the benefit of our unitholders,” Icahn said in a statement. After the Hindenburg report, “the ensuing government investigation has resulted in this settlement that does not allege that IEP or I inflated NAV or engaged in a 'Ponzi-like' structure.”
Both settlement agreements noted that Icahn and IEP cooperated with the investigation in providing relevant information and documents. Icahn and Icahn Enterprises did not admit or deny the SEC's findings, but they agreed to cease and desist from future violations, the agency said.
The SEC determined that Icahn did not properly amend a securities filing to describe his personal agreements and IEP securities commitments through July 2023. That month, he also renegotiated the terms of the loan with a group of banks, severing the loans from IEP stock performance.
Icahn Enterprises said last year it had been contacted by both the SEC's enforcement division and the U.S. Attorney's Office to provide information on its corporate governance, capitalization, securities offerings, disclosures, dividends, valuation, materials of marketing and due diligence.
IEP shares were sent into a downward spiral last May when Hindenburg Research said it was cutting the company's units. Hindenburg said in a lengthy report that the company was overvalued and said it had found evidence of inflated valuations for some of its assets.
“IEP is resolving an unrelated disclosure violation for matters that were reviewed by outside counsel at the time,” Jonathan Streeter, an attorney for IEP, said in a statement. “When IEP made that correction, its unit price barely moved and the market didn't react.”