Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Carl Icahn (Icahn), previously associated with Icahn & Co., Inc., has at least one disclosable event. These events include one regulatory event, alleging that Icahn recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on August 19, 2024.
The Securities and Exchange Commission deems it appropriate that cease and-desist proceedings be, and hereby are, instituted against Carl C. Icahn (Respondent). In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement which the Commission has determined to accept. The Commission finds that From at least December 31, 2018 through the present, Icahn pledged approximately 51% to 82% of IEP’s outstanding securities as collateral to secure personal margin loans worth billions of dollars under agreements with various lenders. Notwithstanding his collateral pledges, Icahn did not file amendments to his Schedule 13D, as required by Section 13(d)(2) and Rule 13d-2(a) to reflect material changes to the facts reported under Item 6, describing his personal margin loan agreements and associated amendments that pledged IEP securities as collateral, until July 10, 2023, and similarly did not file exhibits under Item 7 of his Schedule 13D, disclosing his wholly-owned entities’ entry into guaranty agreements in connection with the aforementioned loan agreements and amendments, including with respect to the amendment to Schedule 13D filed on July 10, 2023. The failures to file amendments to Schedule 13D deprived existing and prospective IEP investors of required information. As a result, Icahn violated Section 13(d)(2) of the Exchange Act and Rule 13d-2(a) thereunder.
Brokers are required to adhere to the SEC’s Regulation Best Interest (Reg BI) standard of care under the Securities Exchange Act of 1934 which establishes a ‘best interest’ standard for broker-dealers and associated persons. This standard applies when brokers make recommendations to retail customer for any securities transaction or investment strategy involving securities, including recommendations of types of accounts. Reg BI is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest.
There are several different aspects of the rule that brokers must comply with. One of which is the care obligations which requires brokers to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest. The care obligations includes three components. First, the advisor must have an understanding of the potential risks, rewards, and costs associated with a product, investment strategy, account type, or series of transactions. Next, the advisor must have a reasonable understanding of the specific retail investor’s investment profile. The customer’s profile information generally includes an investor’s financial situation and needs; investments; assets and debts; marital status; tax status; age; investment time horizon; liquidity needs; risk tolerance; investment experience; investment objectives and financial goals; and any other information the retail investor may disclose in connection with the recommendation or advice. The associated person must then apply both their reasonable diligence into various investment options as well as the information gathered as to the investor’s specific needs when considering the investment recommendation. The broker must explore various alternative investment options available to address these needs and determine that there is a reasonable basis to believe that the recommendation or service being recommended is in the retail investor’s best interest.
Finally, an advisor must also analyze the specific account features offered and determine whether their client can benefit from them in order to meet their care obligations. While securities and investments come with costs that must be considered, the type of securities account also has changes the cost equation for the investor and can change the retail customers’ future investment returns. The associated person must consider the different types of securities accounts for their client and determine whether or not the cost or features are reasonably needed for the client or if the customer’s current account costs and features are superior to solutions available to the advisor. In any event, the type of account and services recommended must be in the investor’s best interest.
Icahn has been in the securities industry for more than 37 years. Icahn has been registered as a Broker with Icahn & Co., Inc. since 1968.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.
