Icahn Enterprises wins dismissal of investor lawsuit

(Reuters) – Carl Icahn’s investment company, Icahn Enterprises, won the dismissal of a lawsuit alleging it artificially inflated its share price by issuing unsustainably high dividends to help the billionaire investor obtain large amounts of personal loans .

In a ruling Friday, U.S. District Judge K. Michael Moore in Miami said shareholders in the proposed class action had failed to prove the company made material misstatements or omissions and did so with intent to defraud.

Attorneys 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 gave shareholders until Oct. 14 to file an amended complaint.

Shares of Icahn Enterprises have fallen by more than three-quarters since May 2023, when short-selling firm Hindenburg Research questioned Icahn’s dividends and loans and accused Icahn of overseeing a “Ponzi-like economic structure.”

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

Shareholders said the true health of Icahn Enterprises became apparent as his Auto Parts Plus business went bankrupt, the company cut its dividend and Icahn renegotiated his loans.

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

In his 28-page ruling, Moore cited the company’s disclosures that it might cut dividends and said its general disclosures about the Carl Icahn loan were enough to alert investors to the risks.

He also said that Icahn Enterprises’ 2021 annual report disclosed Carl Icahn’s stock holdings and that there were no allegations that any defendant had engaged in insider trading.

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

The case is Kosowsky v Icahn Enterprises LP et al, U.S. District Court, Southern District of Florida, no. 23-21773.

(Reporting by Jonathan Stempel in New York; Editing by Diane Craft)