Carl Icahn’s Firm Is Under Investigation After Claims of ‘Ponzi-Like’ Scheme

  • Icahn Enterprises is being investigated by prosecutors after claims that the firm is running a “Ponzi-like” scheme.
  • Prosecutors have asked the firm for information related to its financials, according to a Wednesday filing.
  • Company shares fell 19% Wednesday after losing nearly 25% the prior week.

Carl Icahn’s investment firm, Icahn Enterprises, is being investigated by federal prosecutors after a short-seller accused the firm of running a “Ponzi-like” scheme

In a filing to the Securities and Exchange Commission on Wednesday, the firm disclosed that the US Attorney’s office contacted Icahn Enterprises on May 3, a day after the short-seller Hindenburg released a report accusing the company of artificially inflating its assets.

Prosecutors were seeking information related to Icahn Enterprises’ corporate governance, stock offerings, dividends, and other aspects of its business, the filing said. 

“We are cooperating with the request and are providing documents in response to the voluntary request for information. The US Attorney’s office has not made any claims or allegations against us or Mr. Icahn with respect to the foregoing inquiry,” the company said in the filing. “We believe that we maintain a strong compliance program and, while no assurances can be made and we are still evaluating the matter, we do not currently believe this inquiry will have a material impact on our business.”

Shares of Icahn Enterprises fell 19% on Wednesday, after losing nearly 25% the previous week after Hindenburg’s report was first released. 

Icahn, who serves as the firm’s chairman, wasn’t present at the company’s first-quarter earnings call, though he responded to the Hindenburg claims in a statement released later on Wednesday. 

“Mr. Anderson’s modus operandi is to launch disinformation campaigns to distort companies’ images, damage their reputations and bleed the hard-earned savings of individual investors,” Icahn said, referring to Hindenburg’s founder Nathan Anderson. “But, unlike many of its victims, we will not stand by idly. We intend to take all appropriate steps to protect our unitholders and fight back.”

Hindenburg has targeted other big firms this year, and previously released a report on Adani Group that shaved billions of the firm’s market cap. It also released a report on Block earlier this year, causing shares of the payment company to plunge.  

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