Title: Carl Icahn’s Firm Slashes Dividend Amid Controversy Over Ponzi-Like Accusations
Subtitle: Icahn Enterprises Faces Share Price Collapse and SEC Inquiry
In a surprising move, Carl Icahn’s firm, Icahn Enterprises, announced on Friday that it would be cutting its dividend by half. This decision comes following recent accusations made by Hindenburg Research, a renowned investment research firm, claiming that Icahn Enterprises was operating a “Ponzi-like” structure to pay dividends.
The allegation by Hindenburg Research triggered a massive selling frenzy in the shares of Icahn Enterprises a few months ago, resulting in the firm closing 23% lower and losing over 50% of its value since May. Carl Icahn himself has struggled to respond to these allegations and has dismissed them as “misleading”. However, in response to the controversy, he has restructured personal loans that required him to post collateral in case the share price fell even further.
In a letter addressed to investors, Icahn stated that the company would be refocusing its efforts on activism and reducing unsuccessful bets on a market slump. Despite the accusations from Hindenburg Research, Icahn Enterprises plans to continue distributing dividends, albeit at a lower rate than usual. The firm announced it would be distributing $1 per depositary unit for the second quarter, which is lower than its usual payout of $2 per unit.
However, the troubles for Icahn Enterprises do not end there. The company recently disclosed that it is cooperating with the enforcement division of the Securities and Exchange Commission (SEC). The SEC had reached out to Icahn Enterprises in June for information, possibly indicating an ongoing investigation into the firm’s operations.
Financial reports reveal that Icahn Enterprises reported a loss of $269 million, or 72 cents per depositary unit, for the second quarter. This is a significant increase from the loss of $128 million, or 41 cents per unit, reported during the same period last year. Unsurprisingly, the share price of Icahn Enterprises fell to a two-month low during the session on Friday.
Despite the challenges and investigations, Icahn remains steadfast and has denied the accusations made by Hindenburg Research. He pledged to “fight back” against the report, indicating that the firm will continue operating and distributing dividends. It remains to be seen how Icahn Enterprises will navigate these troubled waters and regain investor confidence.
In the upcoming months, investors and industry experts will closely monitor the developments surrounding Icahn Enterprises as the SEC investigation unfolds and potential legal action takes shape.