Carl Icahn spoke at Delivering Alpha in New York on Sept. 13, 2016.
David A. Grogan took the photograph for CNBC.
The investment company Icahn Enterprises, run by Carl Icahn, successfully dismissed a lawsuit. The lawsuit claimed that the company raised its share price artificially by giving out very high dividends that were not sustainable. This supposedly helped Carl Icahn get large personal loans.
A judge in Miami, K. Michael Moore, made the decision last Friday. The judge said that the people who started the class action lawsuit didn’t prove that the company lied or hid important information on purpose to trick people.
The shareholders’ lawyers didn’t say anything right away about the decision. A representative for Icahn Enterprises also didn’t comment right away. The judge gave the shareholders until Oct. 14 to fix their complaint and file it again.
The value of Icahn Enterprises’ shares has dropped a lot since May 2023. This happened after a company called Hindenburg Research questioned the company’s dividends and loans. They also said Carl Icahn was running things like a Ponzi scheme.
Carl Icahn agreed to pay $2 million last month to end a case with the U.S. Securities and Exchange Commission. The commission said he didn’t tell people about how much he borrowed using his company’s shares.
The shareholders said the state of Icahn Enterprises’ health was clear once its Auto Parts Plus business went under, the company cut its dividends, and Carl Icahn changed his loans.
Carl Icahn owns about 85% of his company, and he lost a lot of money when the share price dropped.
The judge, in a 28-page document, mentioned that the company had already talked about possibly lowering dividends. This meant investors knew there were risks. The annual report from 2021 also showed that Carl Icahn gave some of his shares as collateral. There was no evidence of insider trading.
According to Moore, the way things were done showed that the people involved, including Icahn, believed in the value of the company long-term. This didn’t fit with the idea that they were trying to raise the stock price artificially to help themselves.
The case is known as Kosowsky v Icahn Enterprises LP et al, in the U.S. District Court for the Southern District of Florida, No. 23-21773.
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