International Law

What Can you Learn from Carl Icahn?

Carl Icahn is a legendary investor, corporate raider, and relentless worker. How can he help you avoid fraud?

Well consider the SEC's fraud allegation in Thompson Consulting Fraud

"The SEC charged Thompson Consulting, Inc., Kyle Thompson, David Condie and Sherman Warner with violations of the antifraud provisions of the securities laws by engaging in much riskier trading strategies than those described to investors, several of whom were seniors.

The Commission alleges that Thompson, Condie and Warner managed the hedge funds' investment strategy and also made sales presentations to potential investors in which they emphasized the safety of Thompson Consulting's investment strategy.

The Commission's complaint, filed in the United States District Court for the District of Utah, also alleges that Thompson Consulting's deviations from its stated investment policy resulted in substantial losses to both the hedge funds and an individual client. Among those departures from its stated strategy were failed investments in options on the stock of a subprime lender."

So how can Carl help you?

With the Icahn lift.

As explained by Lesley Stahl at 60 Minutes, the Icahn lift is really quite simple.

"I'm asking you this because one of the big raps against you is that what Carl Icahn wants to do is go in and get a fast, quick profit out of the company. And he doesn't think down the road, Stahl said.

Yeah, but I can only talk facts, Icahn replied. In every company we've gone into that we get control, we put millions and millions of dollars into them.

It's true: sometimes he takes over bankrupt companies, like a chain of Nevada casinos, puts millions into them and turns them around. But more often, he buys up a stock, agitates to get the price up - the Icahn lift - and gets out.

I make money. Nothing wrong with that. That's what I want to do. That's what I'm here to do. That's what I enjoy, he told Stahl.

You tell me you're a shareholder activist, Stahl said.

I don't say - the name is the same. An activist is the same as a raider. You call it whatever you want. A rose by any other name, Icahn said.

Icahn said he hasn't changed one iota.

I'm still doing the same thing. I go in, buy a lot of stock in an undervalued company. It helps the other shareholders a great deal. But I'm not putting myself in a cloak and saying, 'Oh, shareholders, you know, I'm doing a great job for you,' Icahn told Stahl.

You don?t do it for the other shareholders, you do it for you - but it does happen to raise all the boats? Stahl asked.

It helps, Icahn replied. It helps the shareholders immensely.

So are you on the Icahn Lift? Why not?

Full post as published by Misleading Advertising Law on March 09, 2008 (boomark / email).