Carl Icahn talking at Delivering Alpha in New York on Sept. 13, 2016.
David A. Grogan | CNBC
Carl Icahn’s funding firm Icahn Enterprises gained the dismissal of a lawsuit claiming it artificially inflated its share worth by issuing unsustainably excessive dividends to assist the billionaire investor receive massive quantities of non-public loans.
In a choice on Friday, U.S. District Decide Okay. Michael Moore in Miami stated shareholders within the proposed class motion failed to indicate that the corporate made materials misrepresentations or omissions and did so with an intent to defraud.
Attorneys for the shareholders didn’t instantly reply to requests for remark. A spokesman for Icahn Enterprises didn’t instantly reply to an analogous request. Moore gave the shareholders till Oct. 14 to file an amended criticism.
Icahn Enterprises shares have fallen greater than three-quarters since Might 2023, when the short-selling agency Hindenburg Analysis questioned its dividends and Icahn’s borrowing, and accused Icahn of overseeing a “Ponzi-like financial construction.”
Final month Icahn agreed with out admitting wrongdoing to pay $2 million to settle U.S. Securities and Trade Fee civil expenses that he did not disclose his vital borrowing in opposition to the shares.
The shareholders stated Icahn Enterprises’ true well being grew to become evident as its Auto Components Plus enterprise went bankrupt, the corporate slashed its dividend and Icahn renegotiated his loans.
Icahn owns about 85% of his firm’s shares, and personally misplaced many billions of {dollars} because the share worth fell.
In his 28-page choice, Moore cited the corporate’s disclosures that it may decrease dividends, and stated its common disclosures about Carl Icahn’s borrowing have been ample to alert traders to the dangers.
He additionally stated Icahn Enterprises’ 2021 annual report disclosed Carl Icahn’s share pledges, and that there have been no allegations that any defendant performed insider buying and selling.
“This conduct means that the person defendants, together with Icahn, believed within the long-term worth of IEP and is inconsistent with the speculation that defendants have been engaged in a scheme to artificially inflate the inventory worth for private acquire,” Moore wrote.
The case is Kosowsky v Icahn Enterprises LP et al, U.S. District Courtroom, Southern District of Florida, No. 23-21773.