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Executives who make it to the top through the use of sharp elbows often get toppled by someone else’s sharper elbows.

Such is the case with famed investor Carl Icahn. The 88-year-old head of Icahn Enterprises ( IEP ) began his career as a corporate raider in the late 1970s.

The idea was to buy stakes in troubled companies, push them to take steps to boost their stock prices, and then sell their shares for a profit.

One of his most famous deals was a 1986 leveraged buyout of the iconic airline Trans World Airlines (TWA), in which Icahn gained full ownership. He then methodically sold TWA’s assets, leaving the company with $540 million in debt.

In 1998, Icahn and an investor group acquired a 5% stake in RJR Nabisco, urging the company to separate its tobacco and food units, which it ultimately did. In 2008, he forced his way onto the board of the fallen technology star Yahoo.

In 2012, Icahn bought a stake in Netflix, and in 2013-14, he did the same with Apple.

Not all of Icahn’s plays were winners. He lost almost $2 billion on his investment in car rental company Hertz in 2020.

Icahn: raider or activist?

In recent years, corporate raiders like Icahn have become known as shareholder activists and have gained respect.

Activism by heavyweights such as Icahn, Elliott Management, and Nelson Peltz has made plenty of money for investors – including the activists themselves, of course.

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As for Icahn, he is never far from the public eye. Much attention has been focused on his running feud with the hedge-fund star Bill Ackman of Pershing Square Capital Management. The duo went mouth-to-mouth on CNBC in 2013 and haven’t let up since.

In 2016, Icahn endorsed Donald Trump for president. After locking up the Republican nomination, Trump said he would name Icahn treasury secretary. That, obviously, didn’t happen, as Steve Mnuchin got the job. Icahn did act as an adviser to President Trump for eight months.

Fund manager buys and sells:

Icahn has also been highly involved in philanthropy. Icahn Stadium on Randall’s Island in New York City, which seats 5,000, is used for track meets and recreational programs for children.

The Hindenburg Report and SEC settlement

Some of the sheen was taken off Icahn’s business activities in May 2023, when short-seller Hindenburg Research issued a negative report about Icahn Enterprises.

The commentary claimed the company was overvalued, its asset valuations were inflated, and an unsustainable dividend was distributed.

Related: Carl Icahn to pay $2 million to settle SEC charges

Icahn Enterprises indeed halved its dividend in August 2023. And the stock has dropped 59% since April 30, 2023, two days before the Hindenburg report was published. It traded at $15.75 on August 20.

The hammer came down again on Icahn this week.

He and his company entered a $2 million settlement with the Securities and Exchange Commission. The regulator charged that he neglected to disclose big loans he took out, using Icahn Enterprises shares as collateral.

Icahn didn’t admit or deny wrongdoing.

Contrasting reactions to settlement

The investor had pledged as much as 65% of his Icahn Enterprises shares in exchange for up to $5.1 billion in personal margin loans from several lenders.

The risk was that if the share price fell, the collateral’s value would fall, potentially forcing him to sell shares. That could drive the stock price down further.

Hindenburg laid into Icahn after news of the settlement. “Icahn rightly got charged by the SEC for failing to disclose details of his massive margin loan,” it wrote on X. “The company is still operating a Ponzi-like structure, as we originally alleged. We remain short IEP.” (A short sale is a bet that a stock's price will fall.)

Icahn, of course, sees things differently. “We are glad to put this matter behind us and will continue to focus on operating the business for the benefit of unit holders,” he said in a statement.

After Hindenburg’s report, “the government investigation that followed has resulted in this settlement which makes no claim IEP or I inflated [net asset value] or engaged in a ‘Ponzi-like’ structure,” Icahn said.

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