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Activist investor Carl Icahn’s empire said on Wednesday it is fielding inquiries about its operations from U.S. prosecutors, a week after a short-seller accused it of over-valuing its assets, sending its shares down 18%.
Icahn Enterprises LP’s (IEP) revelation that it had received inquiries from prosecutors in the Southern District of New York came as the firm posted a surprise quarterly loss on Wednesday, due in part to the bankruptcy of an affiliate car parts distributor, IEH Auto Parts Holding LLC.
IEP has had a tough week. Its shares sank to a 13-year low at one point after short seller Hindenburg Research published a report on May 2 accusing IEP of over-valuing its assets and relying on a “Ponzi-like” structure to pay dividends.
IEP said on Wednesday prosecutors had contacted it on May 3 “seeking production of information relating to it and certain of its affiliates’ corporate governance, capitalization, securities offerings, dividends, valuation, marketing materials, due diligence and other materials.”
The company said it was cooperating with the request and that the U.S. Attorney’s office has not made any claims or allegations against it or Icahn.
A spokesman for the U.S. Attorney’s office declined to comment.
Icahn found himself in unchartered waters with Hindenburg’s scathing criticism of his company. The famed activist investor is usually the one scolding companies over their management or transparency issues, not the other way around.
“Icahn has been using money taken in from new investors to pay out dividends to old investors,” Hindenburg had alleged about the Florida-based company with investments in the energy, automotive, food packaging, real estate and other industries.
Icahn, who has called the report “self-serving”, reiterated his defense of IEP on Wednesday.
“Hindenburg Research, founded by Nathan Anderson, would be more aptly named Blitzkrieg Research given its tactics of wantonly destroying property and harming innocent civilians,” IEP said in a statement citing Icahn.
“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.”
Excluding one-time items, Icahn Enterprises reported a loss of 11 cents per share, missing analysts’ average estimate of a 19 cents profit, according to Refinitiv data.
Revenue for the quarter ended March 31 came in at $2.6 billion compared to $4.1 billion a year earlier.
Source: Yahoo Finance
