Carl Icahn’s Firm Faces Federal Inquiry

The investment firm controlled by the billionaire activist investor Carl C. Icahn has fielded questions from federal prosecutors about its management and operations, according to a securities filing made on Wednesday.

On May 3, federal prosecutors in Manhattan requested documents from Mr. Icahn and his firm just one day after his publicly traded company, Icahn Enterprises, became a target of Hindenburg Research, the short-seller firm that has made its name in recent years by taking on the Indian tycoon Gautam Adani and the Twitter co-founder Jack Dorsey.

News of the inquiry was the latest setback for Mr. Icahn, who is best known for targeting publicly traded companies and their chief executives and pressuring management to make changes.

Short sellers profit when stock prices fall, and shares of Icahn Enterprises have fallen nearly 40 percent since Hindenburg Research released a report last week, accusing the company of running “Ponzi-like economic structures.” On Wednesday, the stock fell about 15 percent on news of the federal inquiry.

Mr. Icahn’s firm said in the filing that federal prosecutors had “not made any claims or allegations against us or Mr. Icahn.” The company added that it was cooperating with authorities and maintained “a strong compliance program.” In its filing, the firm described a broad inquiry that covers everything from corporate governance to marketing materials to securities offerings.

A spokesman for the U.S. attorney’s office for the Southern District of New York declined to comment.

Mr. Icahn, 87, is one of Wall Street’s best-known activist investors. He rose to fame in the 1980s as a so-called corporate raider who forced changes at companies like Trans World Airlines and RJR Nabisco.

Mr. Icahn owns roughly 84 percent of the shares in Icahn Enterprises and has pledged the majority of them as collateral for bank loans, according to filings.

Six years ago, federal prosecutors opened an investigation into Mr. Icahn’s role in advising the Trump administration on environmental issues that had the potential to affect his firm’s finances. No action was taken against him or his company.

Hindenburg, led by Nathan Anderson, has emerged as one the more aggressive short-selling research firms in recent years. It published a report about the electric vehicle manufacturer Nikola a year before the company’s founder, Trevor Milton, was indicted on securities fraud charges. A related civil complaint filed by the Securities and Exchange Commission referenced the Hindenburg report. Mr. Milton was convicted on securities fraud charges in October.

Mr. Anderson declined to comment on the company’s disclosure. Hindenburg has taken a short position in Icahn Enterprises, which means it stands to profit from the sharp decline in the company’s shares.

On Wednesday, Mr. Icahn issued a response to Hindenburg’s report on his firm, calling it “misleading and self-serving.” The statement addressed specific criticisms about his business operations and how he valued companies in his portfolio.

“Mr. Anderson’s modus operandi is to launch disinformation campaigns to distort companies’ images, damage their reputations and bleed the hard-earned savings of individual investors,” Mr. Icahn wrote. “But, unlike many of its victims, we will not stand by idly.”

Still, Mr. Icahn acknowledged that his firm’s performance in recent years had been below its historical average. He attributed the firm’s underperformance to its bets against the stock market. He said Icahn Enterprises planned to focus more on corporate activism, or taking a stake in companies and pushing for change.

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