SEC charges Icahn Enterprises following failure to disclose pledges
20 August 2024 US
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The US Securities and Exchange Commission (SEC) has announced charges against Carl Icahn and his publicly traded company, Icahn Enterprises (IEP).
The charges were brought for failing to disclose information relating to Icahn’s pledges of IEP securities as collateral, to secure personal margin loans worth billions of dollars under agreements with various lenders.
IEP and Icahn have agreed to pay US$1.5 million and US$500,000 in civil penalties, respectively, to settle the SEC’s charges.
Icahn is IEP’s controlling shareholder and chairman of the board of directors of IEP’s general partner.
According to the SEC’s orders, from 31 December 2018, through the present, Icahn pledged approximately 51 to 82 per cent of IEP’s outstanding securities as collateral, to secure personal margin loans worth billions of dollars under agreements with various lenders.
Notwithstanding Icahn’s various margin loan agreements and amendments, IEP failed to disclose Icahn’s pledges of IEP securities as required in its Form 10K until 25 February 2022.
Icahn also failed to file amendments to Schedule 13D describing his personal margin loan agreements and amendments, which dated back to at least 2005, and failed to attach required guaranty agreements.
Icahn’s failure to file the required amendments to Schedule 13D persisted until at least 9 July 2023.
The SEC’s orders find that IEP violated Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-1 thereunder 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.
Osman Nawaz, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit (CFIU), says: “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. Due to both disclosure failures, existing and prospective investors were deprived of required information.”
The charges were brought for failing to disclose information relating to Icahn’s pledges of IEP securities as collateral, to secure personal margin loans worth billions of dollars under agreements with various lenders.
IEP and Icahn have agreed to pay US$1.5 million and US$500,000 in civil penalties, respectively, to settle the SEC’s charges.
Icahn is IEP’s controlling shareholder and chairman of the board of directors of IEP’s general partner.
According to the SEC’s orders, from 31 December 2018, through the present, Icahn pledged approximately 51 to 82 per cent of IEP’s outstanding securities as collateral, to secure personal margin loans worth billions of dollars under agreements with various lenders.
Notwithstanding Icahn’s various margin loan agreements and amendments, IEP failed to disclose Icahn’s pledges of IEP securities as required in its Form 10K until 25 February 2022.
Icahn also failed to file amendments to Schedule 13D describing his personal margin loan agreements and amendments, which dated back to at least 2005, and failed to attach required guaranty agreements.
Icahn’s failure to file the required amendments to Schedule 13D persisted until at least 9 July 2023.
The SEC’s orders find that IEP violated Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-1 thereunder 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.
Osman Nawaz, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit (CFIU), says: “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. Due to both disclosure failures, existing and prospective investors were deprived of required information.”
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