Shares of Icahn Enterprises L.P. (IEP) continued their upward climb on Tuesday, following a remarkable 14% surge the previous day. The positive momentum was fueled by a significant legal victory for the company.
On September 13th, U.S. District Court Judge K. Michael Moore dismissed a class action lawsuit filed against Icahn Enterprises. The judge ruled that the lawsuit failed to demonstrate that the company made any material misrepresentations or omissions with intent to defraud. This lawsuit stemmed from allegations made by the notorious short seller, Hindenburg Research.
Carl Icahn, the chairman of Icahn Enterprises, expressed satisfaction with the outcome, stating, “We are pleased that the spurious claims of various unscrupulous characters, working together in a coordinated and clandestine network, have been debunked.”
This legal victory comes on the heels of another significant development: a settlement with the Securities and Exchange Commission (SEC) concerning disclosures about Icahn’s personal margin loans.
In August, Icahn and his firm agreed to pay a total of $2 million in civil penalties to resolve the SEC investigation. According to the SEC, Icahn had pledged a substantial portion of Icahn Enterprises’ outstanding securities as collateral for billions of dollars in personal loans from various lenders. This practice, which began in 2018, was not disclosed until 2022.
The SEC also alleged that Icahn failed to file amendments to his securities filings, outlining his personal margin loan agreements and amendments dating back to at least 2005.
In late August, Icahn Enterprises announced its intention to potentially issue and sell up to $400 million worth of depositary units. On Tuesday, the company confirmed that it had only sold less than $3.5 million worth of units under this program since its announcement.
The positive news surrounding the lawsuit dismissal and SEC settlement appears to have boosted investor confidence in Icahn Enterprises. On Tuesday, IEP shares were up by a significant 7.91%, adding to the previous day’s gains. The stock was trading around $13.40 at the time of publication.
