Icahn Enterprises wins dismissal of investor lawsuit (updated)

Icahn Enterprises LP

14/09/2024 24:19

(Adds accusations, details from decision, case citation,
byline)
       Sept 13 (Reuters) - 
    Carl Icahn's investment company Icahn Enterprises  IEP.O 
won the dismissal of a lawsuit claiming it artificially inflated
its share price by issuing unsustainably high dividends to help
the billionaire investor obtain large amounts of personal loans.
        In a decision on Friday, U.S. District Judge K. Michael
Moore in Miami said shareholders in the proposed class action
failed to show that the company made material misrepresentations
or omissions and did so with an intent to defraud.
        Lawyers 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 the
shareholders until Oct. 14 to file an amended complaint.
    Icahn Enterprises shares have fallen more than
three-quarters since May 2023, when the short-selling firm
Hindenburg Research questioned its dividends and Icahn's
borrowing, and accused Icahn of overseeing a "Ponzi-like
economic structure."
        Last month Icahn agreed without admitting wrongdoing to
pay $2 million to settle U.S. Securities and Exchange Commission
    civil charges
     that he failed to disclose his significant borrowing
against the shares.
  
        The shareholders said Icahn Enterprises' true health
became evident as its Auto Parts Plus business went bankrupt,
the company slashed its dividend and Icahn renegotiated his
loans.
  
        Icahn owns about 85% of his company's shares, and
personally lost many billions of dollars as the share price
fell.
  
        In his 28-page decision, Moore cited the company's
disclosures that it could lower dividends, and said its general
disclosures about Carl Icahn's borrowing were sufficient to
alert investors to the risks.
  
        He also said Icahn Enterprises' 2021 annual report
disclosed Carl Icahn's share pledges, and that there were no
allegations that any defendant conducted insider trading.
  
        "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 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)
 ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))