Billionaire investment magnate Carl Icahn and his company Icahn Enterprises LP (IEP) have been charged by U.S. regulators for failing to disclose billions of dollars in private loans.

The U.S. Securities and Exchange Commission (SEC) said IEP and Icahn, who serves as chairman, had agreed to pay civil penalties of $1.5 million and $500,000, respectively, to settle the allegations.

Since December 31, 2018, Icahn has used IEP securities – he has pledged approximately 51 to 82 percent of IEP’s outstanding securities – as collateral to secure billions of dollars’ worth of personal Lombard loans under agreements with various lenders, the SEC said.

According to the agency, IEP did not disclose Icahn’s pledges of IEP securities in its annual report until February 2022, and Icahn did not file the required amendments to the filings until July 2023.

Without admitting or denying the SEC’s findings, Icahn and IEP agreed to refrain from future violations and pay the civil penalties.

The settlement came 15 months after prominent short seller Hindenburg Research published a series of allegations against IEP, including claims that the company overvalued its holdings and relied on a “Ponzi-like” structure to pay dividends.

In a statement Monday, Icahn hit back at Hindenburg for publishing a “false report” to cash in on IEP’s stock price decline. A subsequent government investigation “led to this settlement,” he said, “which makes no claim that IEP or I inflated (the net asset value) or operated a ‘Ponzi-like’ structure.”

IEP shares fell 5.5 percent in New York on Monday morning after the SEC said the company’s investors had been “withheld” information about Icahn’s loans.

Icahn, 88, has a personal fortune of more than $6 billion, according to Bloomberg. He is one of the world’s best-known activist investors, buying up shares in companies and demanding change.

“The federal securities laws imposed independent disclosure requirements on both Icahn and IEP,” said Osman Nawaz, chief of the SEC’s Complex Financial Instruments Division. “Those disclosures would have revealed that Icahn pledged more than half of IEP’s outstanding shares at any given time. Both disclosure deficiencies deprived existing and prospective investors of required information.”

Icahn said: “Hindenburg’s course of action to publish defamatory and unsubstantiated allegations has harmed IEP and its investors. We are pleased to put this matter behind us and will continue to focus on running the business for the benefit of shareholders.”

On Monday, Hindenburg reiterated his report, saying that Icahn “was rightly charged by the SEC for failing to disclose details of his massive Lombard loan.”

Jonathan Streeter, a lawyer advising Icahn Enterprises, said: “Over a year ago, Hindenburg issued a self-serving report that made false and totally irresponsible allegations that IEP had inflated its net asset value and paid out dividends in a Ponzi-like manner. The government investigated these allegations and IEP and Carl Icahn cooperated fully. The result is this settlement.

“In short, the government has found absolutely no fraud, nor has it found any inflating of IEP’s NAV (net asset value) or irregularities in its dividends. Instead, IEP is settling an independent disclosure breach in relation to matters that were reviewed by outside advisers at the time in question.”

IEP corrected the disclosure violation in February 2022, “more than a year before the Hindenburg report and the start of the regulatory investigation,” Streeter said. “When IEP made that correction, the unit price barely moved and the market did not react.”