A shareholder lawsuit brought against Icahn Enterprises (IEP) by a group of investors has been dismissed by a U.S. District Court judge.
Icahn Enterprises, which is run by famed investor and corporate raider Carl Icahn, faced charges that it artificially inflated the company’s stock by issuing unsustainably high dividends.
The proposed class action lawsuit also claimed that Carl Icahn used the high share price to secure large personal loans for himself and his family.
However, U.S. District Judge K. Michael Moore in Miami, Florida, dismissed the lawsuit, saying that it failed to show the company made material misrepresentations or omissions, and that the company did so with the intention of defrauding shareholders.
Judge Moore gave the shareholders an Oct. 14 deadline to file an amended complaint against Icahn Enterprises. It is not clear if the group of shareholders plans to do so.
Icahn Enterprises’ stock has declined more than 75% since May 2023, when notorious short-seller Hindenburg Research questioned the company’s high-yielding dividends and accused Carl Icahn of running a de facto Ponzi scheme.
Icahn Enterprises has since cut its quarterly dividend payment in half to $1 per share. The company’s dividend yield currently stands at 37%, one of the highest on Wall Street.
In August of this year, Carl Icahn agreed to pay $2 million U.S. to settle civil charge brought by the U.S. Securities and Exchange Commission (SEC) claiming that he failed to disclose his borrowing of money against company stock.
Carl Icahn continues to own about 85% of the company that bares his name. Icahn Enterprises’ stock has declined 39% so far this year and currently trades at $10.80 U.S. per share.
