Billionaire investor Carl Icahn and his firm Icahn Enterprises LP (IEP) have settled charges for failing to disclose pledges of the company's securities as collateral for billions of dollars in personal loans, U.S. regulators said Monday.
The firm and Icahn agreed to pay $1.5 million and $500,000 in civil penalties, respectively, to settle the charges, the U.S. Securities and Exchange Commission said in a statement.
Starting in 2018, Icahn pledged between 51% to 82% of the IEP's outstanding securities as collateral to secure billions dollars in personal margin loans from multiple lenders but did not disclose this until February 2022, according to the SEC.
Icahn also failed to amend securities filings describing personal loans dating back as far as 2005, the agency said in a statement.
"The federal securities laws imposed independent disclosure obligations on both Icahn and IEP. These disclosures would have revealed that Icahn pledged over half of IEP’s outstanding shares at any given time," Osman Nawaz, head of the Complex Financial Instruments Unit in the SEC's Enforcement Division, said the statement.
This deprived investors of information they needed, he added.
Representatives for IEP did not immediately respond to a request for comment. The SEC said Icahn and IEP had settled without admitting or denying the allegations and agreed to cease and desist from future violations.