Carl Icahn speaks at the Delivering Alpha conference in New York on September 13, 2016.
David A. Grogan | David A. Grogan CNBC
Carl Icahn’s investment company Icahn Enterprises has won the dismissal of a lawsuit that claimed it artificially inflated its stock price by issuing unsustainably high dividends to help the CEO. Billionaire investors take out massive personal loans.
In a ruling on Friday, U.S. District Judge K. Michael Moore in Miami said shareholders in the proposed class action had failed to prove that the company made a material misrepresentation or omission and that in doing so The purpose is to defraud.
Lawyers for the shareholders did not immediately respond to requests for comment. An Icahn Enterprises spokesman did not immediately respond to a similar request. Moore gave shareholders until Oct. 14 to submit an amended complaint.
Icahn Enterprises shares have fallen by more than three-quarters since May 2023, when short-selling firm Hindenburg Research raised questions about its dividends and Icahn’s borrowings and accused him of overseeing a “Ponzi-like economic structure.” ”.
Last month, without admitting wrongdoing, Icahn agreed to pay $2 million to settle U.S. Securities and Exchange Commission civil charges that he failed to disclose large borrowings backed by stock.
Shareholders say the true health of Icahn’s business became apparent as the auto parts business went bankrupt, the company slashed its dividend and Icahn renegotiated loans.
Icahn, who owns about 85% of the company, personally lost billions of dollars as the stock price fell.
In his 28-page decision, Moore cited the company’s disclosure of a potential dividend cut and said its general disclosures about Carl Icahn’s borrowings were sufficient to alert investors to the risks.
He also said that Icahn Enterprises’ 2021 annual report disclosed Carl Icahn’s stock pledge and did not accuse any defendant of insider trading.
“This conduct demonstrates that individual defendants, including Icahn, believe in the long-term value of the IEP and is inconsistent with the theory that the defendants engaged in a scheme to artificially inflate the stock price for personal gain,” Moore wrote.
The case is Kosowsky v. Icahn Enterprises LP et al., U.S. District Court for the Southern District of Florida, No. 23-21773.
