Icahn Discloses U.S. Probe of Trades Before Steel Tariff Imposed

(Bloomberg) -- Billionaire investor Carl Icahn, a onetime adviser to President Donald Trump, said federal prosecutors in New York are looking into his sale of shares of a crane manufacturer last year to determine whether he profited from nonpublic information about U.S. plans for tariffs on imported steel.

The review by the Manhattan U.S. attorney’s office was disclosed by Icahn Enterprises LP in a quarterly government filing. The firm already had revealed that prosecutors had requested information in September 2017 about Icahn’s activities related to the government’s renewable-fuels standards and his role as a presidential adviser. The latest subpoena in June 2018 called for information about the sale of shares in Wisconsin crane maker Manitowoc Co.

Icahn Enterprises said it complied with the prosecutor’s requests, according to a quarterly earnings report published Thursday. It’s not clear why the 2018 subpoena was being disclosed about 10 months months after it was received or what the current state of the investigation is.

“The U.S. Attorney’s Office has not made any claims or allegations against us or Mr. Icahn with respect to either of the foregoing inquiries,” Icahn Enterprises said in the filing. “We maintain a strong compliance program and, while no assurances can be made, we do not believe these inquiries will have a material impact on our business, financial condition, results of operations or cash flows.”

A spokeswoman for the U.S. Attorney’s office declined to comment, and a representative of Icahn didn’t reply to a request for comment.

In the weeks before Trump announced steel tariffs on March 1, 2018, Icahn Enterprises sold more than $31 million in shares of Manitowoc, which depends heavily on foreign metal. Government watchdogs and congressional Democrats called for an investigation after the trades appeared in regulatory filings.

Icahn came of age as a Gordon Gekko-style corporate raider in the 1980s and went on to accumulate stakes in iconic companies like TWA, Time Warner, Clorox and Xerox. He once helped Trump keep control of his troubled Taj Mahal casino in Atlantic City. Icahn became an unpaid adviser to the new president, but quit as criticism mounted about his outsize role in energy, steel and other sectors he was seeking to deregulate.

The probe of Icahn’s actions with Manitowoc revive concern among Trump critics about the increased risk of self-dealing by members of the administration who failed to sever ties to their businesses, including the president.

Business Interests

Trump , the only modern U.S. president with sizable business holdings, campaigned on a promise to run the government like a company. His daughter and son-in-law, both White House aides, have kept their outside investments, while Trump’s family owns a hotel just blocks from the White House and the U.S. Capitol, among other properties.

Icahn, 83, has said he had no knowledge of Trump’s tariff plans before selling off more than one-third of his stake in the crane-maker. Shares in the company had lost more than 20 percent of their value before Icahn began reducing his stake.

“Any suggestion that we had prior knowledge of the Trump administration’s announcement of new tariffs on steel imports is categorically untrue,” Icahn said at the time.

White House spokesman Raj Shah told ABC News at the time that he knew of no conversations between Trump and Icahn about the tariff plans before the announcement. “Mr. Icahn and any investor could have looked at what the president has been saying for not just months but years about this issue, to understand where he was at,” Shah said.

Xerox Battle

Icahn has long been a controversial figure, despised by labor groups and others for buying companies and then selling them off in pieces as workers were fired. Most recently, he has stood in the way of attempts by Fujifilm Holdings Corp. to take over Xerox Corp. Icahn owns almost 10 percent of Xerox.

As a “special adviser” to the president on regulatory reform, Icahn led an effort to kill an Environmental Protection Agency program that he said cost his refineries hundreds of millions of dollars by forcing them to buy renewable fuel credits, generated when biofuel is blended into gasoline. Icahn even vetted candidates to lead the EPA and the Securities and Exchange Commission, the primary regulator that polices possible insider trading.

Icahn has said that he pursued the EPA rule change on the merits and that well-funded opponents were stirring up a fake controversy. “I have a right to talk to the president like any other citizen,” he told Bloomberg News, adding: “And yeah, it helps me. I’m not apologizing for that.”

Because Icahn wasn’t a government employee and received no compensation as a special adviser, he didn’t have to relinquish any of his estimated $20 billion in holdings, nor was he subject to federal ethics rules that typically apply to people who work for the president.

Icahn, an early Trump supporter and prolific fundraiser for his 2016 campaign, was named a special adviser to the president after the election.

Icahn left that role after complaints that the change to the renewable fuel program that he was advocating would benefit CVR Energy Inc., an oil refiner in which he owns a majority stake. In his resignation letter, Icahn assured the president that he “never had access to nonpublic information or profited from my position.”

Soon after, Senator Tammy Duckworth, Democrat of Illinois, urged FBI Director Christopher Wray to examine Icahn’s advisory role “on a government matter that directly affects his own financial interests.”

Stock Sales

Icahn sold the Manitowoc shares in four transactions from Feb. 12 to Feb. 22, according to a regulatory filing. The first two came just days before the Commerce Department rattled markets on Feb. 16 by recommending the tariffs on steel imports. The remainder came before Trump announced a 25 percent tariff on March 1.

The Project On Government Oversight called on the SEC to investigate Icahn for possible insider trading. It also asked the SEC to look into whether Icahn was provided non-public, market-moving information by government officials.

Icahn has found himself on the periphery of major insider-trading investigations, including one that ended with the conviction of Las Vegas gambler Billy Walters, described as Icahn’s friend. In the 2017 trial, Walters’s primary broker said that Walters got most of his trading ideas from Icahn. Icahn wasn’t accused of wrongdoing.

To contact the reporters on this story: Christian Berthelsen in New York at cberthelsen1@bloomberg.net;Greg Farrell in New York at gregfarrell@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Steve Stroth, Elizabeth Wollman

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