Shares of Icahn Enterprises (IEP -2.03%), the holding company run by Carl Icahn were heading lower today on reports that the billionaire investor was charged with not disclosing loans attached to his company's stock.
As of 12:57 p.m. ET, the stock was down 7.3% on the news.
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Icahn gets a slap on the wrist
On Monday, the Securities and Exchange Commission (SEC) fined Icahn $2 million, resolving accusations that he had made personal loans against the value of Icahn Enterprises stock without properly disclosing them.
As a publicly traded company, Icahn Enterprises is subject to such rules, even though Icahn owns roughly 86% of the company. Icahn will pay $500,000, while his company will pay $1.5 million. Icahn had pledged as much as 82% of the company to secure margin loans without disclosing them to shareholders or regulators.
Will it impact Icahn Enterprises?
For a company the size of Icahn Enterprises, $2 million in fines is negligible. The company was valued at $7.5 billion after today's decline. In other words, the sell-off wiped off roughly $500 million of the company's market cap, a reflection of its impact on the company's reputation.
Icahn, who is now 88, has made a number of successful bets over the years, including investing in Netflix when the stock crashed after the Qwikster debacle, and he won a battle against Bill Ackman over Herbalife.
His company currently operates across industries such as energy, automotive, food packaging, real estate, home fashion, and pharmaceuticals.
Today's news seems unlikely to affect the company over the long term unless more similar fines come out.
