Carl Icahn’s Agency Faces Federal Inquiry

The funding agency managed by the billionaire activist investor Carl C. Icahn has fielded questions from federal prosecutors about its administration and operations, in line with a securities submitting made on Wednesday.

On May 3, federal prosecutors in Manhattan requested paperwork from Mr. Icahn and his agency simply someday after his publicly traded firm, Icahn Enterprises, grew to become a goal of Hindenburg Research, the short-seller agency that has made its title lately by taking over the Indian tycoon Gautam Adani and the Twitter co-founder Jack Dorsey.

News of the inquiry was the newest setback for Mr. Icahn, who’s greatest recognized for concentrating on publicly traded firms and their chief executives and pressuring administration to make adjustments.

Short sellers revenue when inventory costs fall, and shares of Icahn Enterprises have fallen practically 40 % since Hindenburg Research launched a report final week, accusing the corporate of operating “Ponzi-like financial buildings.” On Wednesday, the inventory fell about 15 % on information of the federal inquiry.

Mr. Icahn’s agency mentioned within the submitting that federal prosecutors had “not made any claims or allegations in opposition to us or Mr. Icahn.” The firm added that it was cooperating with authorities and maintained “a robust compliance program.” In its submitting, the agency described a broad inquiry that covers every part from company governance to advertising and marketing supplies to securities choices.

A spokesman for the U.S. legal professional’s workplace for the Southern District of New York declined to remark.

Mr. Icahn, 87, is one in every of Wall Street’s best-known activist traders. He rose to fame within the Nineteen Eighties as a so-called company raider who compelled adjustments at firms like Trans World Airlines and RJR Nabisco.

Mr. Icahn owns roughly 84 % of the shares in Icahn Enterprises and has pledged nearly all of them as collateral for financial institution loans, in line with filings.

Six years in the past, federal prosecutors opened an investigation into Mr. Icahn’s function in advising the Trump administration on environmental points that had the potential to have an effect on his agency’s funds. No motion was taken in opposition to him or his firm.

Hindenburg, led by Nathan Anderson, has emerged as one the extra aggressive short-selling analysis companies lately. It printed a report concerning the electrical car producer Nikola a yr earlier than the corporate’s founder, Trevor Milton, was indicted on securities fraud expenses. A associated civil grievance filed by the Securities and Exchange Commission referenced the Hindenburg report. Mr. Milton was convicted on securities fraud expenses in October.

Mr. Anderson declined to touch upon the corporate’s disclosure. Hindenburg has taken a brief place in Icahn Enterprises, which implies it stands to revenue from the sharp decline within the firm’s shares.

On Wednesday, Mr. Icahn issued a response to Hindenburg’s report on his agency, calling it “deceptive and self-serving.” The assertion addressed particular criticisms about his enterprise operations and the way he valued firms in his portfolio.

“Mr. Anderson’s modus operandi is to launch disinformation campaigns to distort firms’ pictures, harm their reputations and bleed the hard-earned financial savings of particular person traders,” Mr. Icahn wrote. “But, not like lots of its victims, we won’t stand by idly.”

Still, Mr. Icahn acknowledged that his agency’s efficiency lately had been under its historic common. He attributed the agency’s underperformance to its bets in opposition to the inventory market. He mentioned Icahn Enterprises deliberate to focus extra on company activism, or taking a stake in firms and pushing for change.