Icahn Enterprises Triumphantly Wins Dismissal of Investor Lawsuit, Igniting Investor Confidence
Carl Icahn’s investment company, Icahn Enterprises, has successfully had a lawsuit dismissed that alleged it artificially inflated its share price through unsustainable dividends, aiding Icahn in securing substantial personal loans. U.S. District Judge K. Michael Moore in Miami ruled that the shareholders in the proposed class action failed to demonstrate that the company made material misrepresentations or omissions with fraudulent intent.
Shareholder attorneys and a spokesperson for Icahn Enterprises did not immediately comment. Judge Moore has allowed shareholders until October 14 to file an amended complaint. Following a short-seller accusation by Hindenburg Research in May 2023, Icahn Enterprises’ shares plummeted over 75%. The firm criticized the dividends and Icahn’s borrowing strategy, likening it to a “Ponzi-like economic structure.”
Icahn recently agreed to a $2 million settlement with the U.S. Securities and Exchange Commission for failing to disclose significant borrowings against his shares without admitting wrongdoing. Shareholders argued that the company’s financial troubles became apparent with the bankruptcy of its Auto Parts Plus business, the dividend cut, and Icahn’s renegotiated loans. Icahn, holding approximately 85% of the company’s shares, experienced substantial personal financial loss as stock values fell.
Moore’s 28-page decision referenced the company’s prior disclosures regarding the potential for dividend reductions and Icahn’s borrowing, affirming that these were sufficient to inform investors of the risks. The decision points out that the 2021 annual report disclosed Icahn’s share pledges and noted the absence of insider trading allegations.
“This conduct suggests that the individual defendants, including Icahn, believed in the long-term value of IEP and is inconsistent with the theory that defendants were engaged in a scheme to artificially inflate the stock price for personal gain,” Moore stated.
The case is Kosowsky v. Icahn Enterprises LP et al, U.S. District Court, Southern District of Florida, No. 23-21773.
Original Story https://www.cnbc.com/2024/09/14/icahn-enterprises-wins-dismissal-of-investor-lawsuit.html
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