Carl Icahn’s Firm Faces Federal Inquiry

An investment firm run by billionaire activist investor Carl C. Icahn has responded to federal prosecutor’s inquiries about its management and operations, according to a securities filing on Wednesday.

On May 3, federal prosecutors in Manhattan demanded documents from Mr. Icahn and his firm, one day after Mr. Icahn’s publicly traded firm, Icahn Enterprises, was targeted by Hindenburg Research, a short-selling firm that has made a name for itself in recent years. bottom. He will face Indian mogul Gautam Adani and Twitter co-founder Jack Dorsey.

The news of the investigation was the latest setback for Icahn, who is known for targeting publicly traded companies and their chief executives and forcing management to change.

Short sellers have profited when stocks have fallen, and Icahn Enterprises has been out of business since Hindenburg Research released a report last week accusing the company of running a “pyramid scheme-like economic structure.” The stock has fallen nearly 40%. Shares fell about 15% on Wednesday on news of the federal investigation.

Icahn’s office said in a filing that federal prosecutors “have not made any allegations or allegations against the company or against Mr. Icahn.” The company is working with authorities and maintaining a “strong compliance program,” he added. In its filing, the company described extensive research covering everything from corporate governance to marketing materials to securities offerings.

A spokesman for the U.S. Attorney’s Office for the Southern District of New York declined to comment.

Icahn, 87, is one of Wall Street’s most famous activist investors. He rose to prominence in the 1980s as a so-called corporate raider who forced companies such as Transworld Airlines and RJR Nabisco to change.

Icahn owns about 84% of Icahn Enterprises, most of which is pledged as collateral for bank loans, according to filings.

Six years ago, federal prosecutors opened an investigation into Icahn’s role in advising the Trump administration on environmental issues that could affect his company’s finances. No action was taken against him or his company.

Led by Nathan Anderson, Hindenburg has emerged as one of the most aggressive short-selling research firms in recent years. The company released a report on electric car maker Nikola a year before its founder, Trevor Milton, was indicted on securities fraud charges. A related civil lawsuit filed by the Securities and Exchange Commission references the Hindenburg Report. Milton was convicted of securities fraud in October.

Anderson declined to comment on the company’s disclosures. Mr. Hindenburg has taken a short position in Icahn Enterprises and stands to profit from a plunge in the stock.

Wednesday, Mr. Icahn issued a response He called the report on Mr. Hindenburg’s company “misleading and selfish.” In the statement, he cited specific criticisms of his business operations and the way he evaluated the companies in his portfolio.

“Mr. Anderson’s modus operandi is to distort the image of the company, damage its reputation and launch a disinformation campaign to drain the hard-earned savings of retail investors,” Icahn wrote. “But unlike many victims, we are not going to stand by and do nothing.”

Still, Mr. Icahn acknowledged that his company’s performance in recent years has been below its historical average. He blamed the company’s poor performance on stock market bets. He said Icahn Enterprises plans to focus more on corporate activities, namely investing in companies to drive change.

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