Stock in Carl Icahn's business plummets by as much as 20% when prosecutors ask for financial data.
The shares of Carl Icahn's company, Icahn Enterprises, fell once more on Wednesday when it was revealed that regulators are looking for details on its corporate governance.
The shares dropped as much as 20% in morning trading after losing close to 25% the week before. According to a regulatory filing, the Southern District of New York's U.S. Attorney's office contacted Icahn Enterprises on Wednesday in order to obtain data on organizational structure, capitalization, securities offerings, dividends, valuation, marketing materials, due diligence, and other topics.
A day after prominent short seller Hindenburg Research declared a short position against Icahn's company, regulators requested information. Last Tuesday, Hindenburg claimed that, among other things, "inflated" asset valuations were to blame for what it claims to be an unusually significant net asset value premium in the shares of the publicly traded holding company.
In the 10-Q filing, Icahn stated that "the U.S. Attorney's office has not made any claims or allegations against us or Mr. Icahn with respect to the foregoing inquiry." "We believe that we have a strong compliance program, and while no guarantees can be given and we are still looking into the matter, we do not currently believe that this inquiry will have a material impact on our operations, financial condition, results, or cash flows," the statement reads.
Icahn, the most well-known corporate raider in history, rose to prominence in the 1980s by completing a hostile acquisition of Trans World Airlines and seizing all of the airline's assets. The multibillionaire investor most recently invested in McDonald's and the biotech company Illumina as an activist.
Icahn Enterprises, a holding firm with its main office in Sunny Isles Beach, Florida, invests in a wide range of industries, including energy, automotive, food packaging, metals, and real estate.
Icahn stated in a statement last week in reaction to the Hindenburg report that the short seller's research was "solely" created to make money on its short position at the expense of Icahn Enterprises' long-term interests.
Icahn said last week that he and his company "stand by our public disclosures, and we believe that IEP's performance will speak for itself over the long term as it always has." "We continue to believe that activism is the best paradigm for investing, and my activist investments over the last 25 years have well proved this out."
Icahn Enterprises' stock has now lost over 35% of its value so far this year.