PHILADELPHIA, June 28, 2023 (GLOBE NEWSWIRE) -- On May 10, 2023, Icahn Enterprises (NASDAQ: IEP) revealed in a filing with the U.S. Securities and Exchange Commission (SEC) that it had been contacted by the U.S. Attorney for the Southern District of New York “seeking production of information relating to it and certain of its affiliates’ corporate governance, capitalization, securities offerings, dividends, valuation, marketing materials, due diligence and other materials.”
This disclosure followed the May 2, 2023, publication of a report in which Hindenburg Research made a number of explosive allegations about IEP. Among them were that Icahn Enterprise had egregiously inflated the value of its assets, including valuing its stake in a meat packaging business at $243 million when the company’s market value was just $89 million, and that the company has run a “Ponzi-like” scheme of selling shares to new investors in order to pay out annual dividends at a yield rate as high as 50.5%, which Hindenburg characterized as “absurd” and “unsupported” when taking the company’s cash flow and net asset value (NAV) into account.
Coinciding with the issuance of the Hindenburg report and disclosure that the U.S. Attorney is investigating Icahn Enterprises, the company’s stock lost nearly 40% of its value, falling from about $50 per share at the close on May 1, 2023, to about $32 per share at the close on May 10, 2023, notwithstanding that IEP had issued a rebuttal to the Hindenburg report that same day.
On May 11, 2023, Hindenburg issued a rejoinder to the company’s response, claiming that Icahn Enterprises had failed to provide any additional insight into its “opaque book of private investments” or its valuations, and failed to address charges that its dividends were not supported by free cash flow. After IEP’s share price fell again on this development, the company announced that (a) for the first time since 1987, its board has approved a formal share repurchase program, and (b) Icahn has increased the number of shares pledged to secure his personal debt (meaning that more than half of the firm’s shares are now pledged to secure Icahn’s margin loans, according to a Bloomberg report on these actions).
On May 11, 2023, as well, a securities class action lawsuit was filed on behalf of purchasers of shares of IEP stock between August 2, 2018 and May 9, 2023. The Complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, alleging that Icahn Enterprises inflated its net asset value; was using money from new investors to pay dividends to old investors; and, for these and other reasons, the company’s statements about its business and prospects were materially misleading.
If you have sustained losses in your investment in shares of Icahn Enterprises, we encourage you to discuss your rights – including potentially seeking to lead or participate in the class action lawsuit – by contacting Mark R. Stein or Linda Border at Barrack, Rodos & Bacine, at the toll-free number 877-386-3304, or via email at investoralert@barrack.com. The deadline for persons seeking to serve as a lead plaintiff for this case is July 10, 2023. Investors who purchased shares of IEP stock between August 2, 2018 and May 9, 2023, and suffered a loss, may be eligible to seek a lead plaintiff position. For more information about this matter and about Barrack, Rodos & Bacine, please visit the firm’s website.
Philadelphia-based Barrack Rodos & Bacine has more than four decades of experience prosecuting securities law class actions, including cases involving accounting fraud and insider trading, and has achieved some of the largest recoveries in U.S. history of securities litigation. The firm's largest recoveries on behalf of investors include $6.19 billion for WorldCom investors, $3.32 billion for Cendant investors, $1.05 billion for McKesson investors, and $970.5 million for AIG investors.
