Billionaire Carl Icahn, 88, a notable figure in the gaming industry and a key player in Eldorado Resorts’ reverse takeover of Caesars in 2019, has agreed to pay the U.S. Securities and Exchange Commission (SEC) $2 million to settle regulatory violations.
The SEC, an independent agency tasked with preventing market manipulation, found that Icahn had failed to disclose his pledging of Icahn Enterprises L.P. (IEP) shares to secure personal margin loans worth billions of dollars. This activity took place from at least December 2018 through February 2022. As the controlling shareholder and board chair of IEP, Icahn had pledged between 51% to 82% of IEP’s outstanding shares to secure loans exceeding $5 billion from various lenders. By law, both Icahn and IEP were required to disclose this lending activity, which they did not.
“These disclosures would have revealed that Icahn pledged over half of IEP’s outstanding shares at any given time,” said Osman Nawaz, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit. “Due to both disclosure failures, existing and prospective investors were deprived of required information.”
To settle the infractions, both Icahn and IEP agreed to pay $2 million in civil penalties without admitting guilt or wrongdoing. However, the regulatory news had a more significant impact on Icahn’s financial standing, leading to an over 8% drop in IEP shares. Once estimated at $23 billion by Forbes in 2015, Icahn’s fortune is now believed to be around $5 billion.
In 2019, Icahn acquired nearly a 10% stake in Caesars Entertainment Corporation, then pushed the company to grant him three board seats. He and his board appointees encouraged the financially troubled casino organization to explore mergers or takeovers. “I believe the best path forward for Caesars requires a thorough strategic process to sell or merge the company,” Icahn stated at the time.
This strategy culminated in Eldorado Resorts completing a $17.3 billion acquisition of Caesars in July 2020. Eldorado paid $8.5 billion and took on $8.8 billion of Caesars’ debt, eventually rebranding as Caesars Entertainment. The deal resulted in substantial financial gains for Icahn.
Icahn’s involvement in the gaming sector goes back further. Notably, he acquired Tropicana Entertainment in 2010 out of bankruptcy for $200 million. Icahn Enterprises invested in upgrading the properties and, in April 2018, sold Tropicana’s six casinos to Gaming and Leisure Properties for $1.21 billion. The lease agreement allowed Eldorado to operate these resorts.
Not all of Icahn’s ventures had straightforward improvements. During the 2008 Great Recession, he acquired the unfinished Fontainebleau Las Vegas in 2010 for $156 million but never resumed its construction. The dormant structure stood as a testament to the economic downturn’s impact on Las Vegas for years. Eventually, in August 2017, Icahn sold the Fontainebleau for $600 million.
In 2016, he also bought Trump Entertainment Resorts out of bankruptcy but faced significant challenges. Shuttering its casino properties, this investment did not yield the expected returns. Icahn sold the Trump Taj Mahal to Hard Rock International for $50 million in March 2017, and the long-closed Trump Plaza was demolished in February 2021.
