Famed activist investor Carl Icahn has agreed to pay a fine after the Securities and Exchange Commission accused him of failing to disclose billions of dollars in personal margin loans pledged against his company’s stock as collateral. The penalty is unlikely, however, to make Icahn's pockets feel much lighter.
The 88-year-old corporate raider is the chairman of Icahn Enterprises, or IEP, a publicly traded limited partnership that operates as a holding company. The SEC alleges Icahn pledged approximately 51% to 82% of IEP’s outstanding securities to secure loans and did not file the proper disclosures in timely fashion.
Icahn's firm has been under investigation since at least last spring, when short-seller Hindenburg Research accused Icahn of using a “Ponzi-like” economic structure at his company. Hindenburg also criticized Icahn for not disclosing how much he’d borrowed, the interest rate, or the loan-to-value maintenance ratio associated with one of those margin loans.
Following an investigation by the SEC, Icahn and IEP agreed to pay $500,000 and $1.5 million, respectively, to settle the charges without admitting or denying the findings.
“After Hindenburg issued a false report to make money on its short position at the expense of ordinary investors, the government investigation that followed has resulted in this settlement which makes no claim IEP or I inflated [net asset value] or engaged in a ‘Ponzi-like’ structure,”
Icahn said in a statement to Fortune. “Hindenburg’s modus operandi, which is to publish scurrilous and unsupported allegations, did damage to IEP and its investors. We are glad to put this matter behind us and will continue to focus on operating the business for the benefit of unit holders.”
As of Wednesday morning, Icahn’s net worth is a $5.3 billion, according to a Forbes estimate. Based on that amount, the fine levied against him personally amounts to just 0.01% of his overall wealth.
For someone making $74,755— the median income for a U.S. household in 2022, the latest data available from the Census Bureau—the equivalent fine would be roughly $7.50. For comparison, the minimum fine for driving more than 10 miles over the speed limit in New York State is $90.
To be clear, the $1.5 million penalty for IEP will also marginally impact Icahn’s total wealth. According to the SEC, he owns anywhere from 85% to 92% of IEP’s outstanding depositary units.
The SEC declined to comment for this story beyond its press release.
While the civil penalties from the agency are relatively minuscule, Icahn’s net worth plummeted after Hindenburg’s allegations. His net worth fell more than $10 billion last May after IEP shares dropped 20%—erasing $3.1 billion—and the Bloomberg Billionaires Index shaved off another $7.3 billion in accounting for a margin loan.
