SEC settles charges with Icahn Enterprises over disclosure violations

The Securities and Exchange Commission (SEC) has charged investor Carl Icahn and his company, Icahn Enterprises (IEP), over disclosure violations.

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The SEC alleges that Icahn and the company failed to disclose information relating to Icahn’s pledges of securities as collateral to secure personal margin loans worth billions of dollars under agreements with various lenders.

IEP and Icahn agreed to pay $1.5 million and $500,000 in civil penalties to settle the SEC’s charges.

From at least Dec. 31, 2018, through the present, Icahn pledged approximately 51 to 82 percent of IEP’s outstanding securities as collateral to secure personal margin loans worth billions of dollars under agreements with various lenders, according to the SEC charges. However, the SEC said IEP failed to disclose Icahn’s pledges of IEP securities as required in its Form 10K until Feb. 25, 2022.

In addition, Icahn failed to file amendments to Schedule 13D describing his personal margin loan agreements and amendments, which dated back to at least 2005. Jhe also failed to attach required guaranty agreements.

The SEC alleged that Icahn’s failure to file the required amendments to Schedule 13D persisted until at least July 9, 2023.

“The federal securities laws imposed independent disclosure obligations on both Icahn and IEP. These disclosures would have revealed that Icahn pledged over half of IEP’s outstanding shares at any given time,” Osman Nawaz, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit (CFIU), said. “Due to both disclosure failures, existing and prospective investors were deprived of required information.”

The SEC found that that IEP violated Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-1 and that Icahn violated certain beneficial ownership reporting provisions of the Exchange Act.

Without admitting or denying the findings, IEP and Icahn agreed to cease and desist from future violations and to pay the civil penalties referenced above.