Icahn Enterprises Wins Investor Lawsuit

Carl Icahn’s investment firm Icahn Enterprises has won a dismissal of a lawsuit accusing it of artificially inflating its stock price by issuing unsustainably high dividends to help the billionaire investor borrow large sums of money.

In a ruling issued Friday, U.S. District Court Judge K. Michael Moore in Miami said shareholders in the proposed class action failed to demonstrate that the company made material and intentional misrepresentations or omissions.

Lawyers for the shareholders did not immediately respond to requests for comment. A spokesman for Icahn Enterprises did not immediately respond to a similar request. Moore has given shareholders until Oct. 14 to file an amended complaint.

Icahn Enterprises’ stock has fallen by more than three-quarters since May 2023, when short-selling firm Hindenburg Research questioned Icahn’s dividends and debt practices, accusing Icahn of overseeing a “Ponzi-like economic structure.”

Last month, Icahn agreed to pay $2 million to settle civil charges from the U.S. Securities and Exchange Commission without admitting wrongdoing because he failed to disclose his significant borrowing from stocks.

Shareholders said the true health of Icahn Enterprises was demonstrated when the Auto Parts Plus business went bankrupt, the company cut its dividend and Icahn had to renegotiate his loans.

Icahn owns about 85% of his company’s shares and has lost billions of dollars as the stock price has fallen.

In his 28-page decision, Moore cited the company’s disclosure that it might reduce its dividend and said the general information about Carl Icahn’s loan was enough to alert investors to the risks.

He also said Icahn Enterprises’ 2021 annual report disclosed Carl Icahn’s stock pledging and there was no allegation that any defendant engaged in insider trading.

“This conduct demonstrates that the individual defendants, including Icahn, believed in the long-term value of the IEP and is inconsistent with a theory that the defendants engaged in a conspiracy to artificially inflate the stock price for personal gain,” Moore wrote.

The case is Kosowsky v Icahn Enterprises LP et al., United States District Court, Southern District of Florida, No. 23-21773.