Carl Icahn to pay $2M to settle SEC charges he faild to disclose stock pledges

Aug. 19 (UPI) -- Prominent activist investor Carl Icahn and his publicly traded company will pay $2 million in civil penalties to settle charges from the Securities and Exchange Commission announced Monday for violating the SEC Act of 1934.

THe SEC said that Icahn and Icahn Enterprises LP failed to disclose information relating to his pledges of using IEP securities as collateral to secure personal margin loans worth "billions of dollars" under various agreements with lenders.

The commission said from December 2018 to the present, Icahn pledged about 51% to 82% of IEP's outstanding securities as collateral to secure the personal margin loans. Icahn is the controlling shareholder and board chair of IEP.

In turn, IEP never disclosed Icahn's pledges of its securities to the SEC as required by law on a Form 10K until February 25, 2022. He also declined to file amendments to Schedule 13D detailing his personal loan agreements, dating back to 2005, nor attach the required guaranty agreements.

Icahn declined to file the proper paperwork until July 9, 2023.

"The federal securities law imposed independent disclosure obligations on both Icahn and IEP," Osman Nawaz, chief of the SEC Enforcement Division's Complex Financial Instruments Unit.

"Due to both disclosure failure, existing and prospective investors were deprived of the required information."

In agreeing to pay two civil penalties, one for $1.5 million and another for $500,000, Icahn and IEP will not have to admit to or deny any of the SEC's findings. The penalties are for violating Section 13(a)of the SEC Act of 1034 and Rule 13a-1.

The short-seller Hindenburg Research brought to light Icahn's margin borrowing in a report issued in May 2023, accusing the one-time notorious corporate raider of not estimating the value of its holdings correctly.

The report spurred Icahn to start updating his filings with the SEC.