May 09, 2017

Senators Call on SEC, EPA, CFTC to Investigate Trump Advisor Carl Icahn for Possible Insider Trading, Market Manipulation in Renewable Fuel Credit Market

Full text of the letter available here (PDF)

Washington, D.C. - U.S. Senators Elizabeth Warren (D-Mass.), Debbie Stabenow (D-Mich.), Tom Carper (D-Del.), Sherrod Brown (D-Ohio), Sheldon Whitehouse (D-R.I.), Tammy Baldwin (D-Wis.), Tammy Duckworth (D-Ill.), and Amy Klobuchar (D-Minn.), called on the heads of the Commodities Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), and the U.S. Environmental Protection Agency (EPA) to investigate the activities of Carl Icahn, top adviser to President Trump and majority owner of a petroleum refining company, for potential insider trading, market manipulation, and other securities and commodities law violations in the market for renewable fuel credits.

As the majority owner of CVR Energy, Mr. Icahn bet heavily in 2016 on a drop in the price of renewable fuel credits, which ultimately resulted in a $50 million windfall for the company.  Mr. Icahn then secured a position as a senior adviser to President Trump, from which he was, according to press reports, able to influence decisions that drove down the price of the credits.

Beginning in late 2016, a series of events occurred which eventually reduced the price of renewable fuel credits by roughly 70 percent from peak cost. First, President Trump, reportedly acting on advice from Mr. Icahn, selected Mr. Scott Pruitt, a vocal critic of the renewable fuel program, as his choice for EPA Administrator. Public reports in February 2017 then indicated that Mr. Icahn, in his role as a special advisor, proposed to the White House a number of changes to the renewable fuel credit program that drove down prices -  all while his company was dumping credits to buy back later at a cheaper price.

"We have no way of knowing at this time whether Mr. Icahn made any of his renewable fuel credit trades or decisions about trades based on material, non-public information or otherwise manipulated the market," wrote the senators. "But the publicly available evidence is troubling, and based on this evidence, we ask that your agencies investigate whether Mr. Icahn's conduct violated any laws under your jurisdiction."

The senators raised their concerns with the CFTC, SEC and EPA because these agencies maintain jurisdiction over insider trading and market manipulation of renewable fuel credits and other securities and commodities laws. In their letter, they asked the three agency heads to assess the "precise nature and extent of Mr. Icahn's communications with President Trump and other Administration officials during and after the Presidential transition," as well as "The extent to which Mr. Icahn influenced the Trump administration's decisions that affected the market for renewable fuel credits and associated markets." The senators also asked for an analysis of Mr. Icahn's decision making process in relation to the selling and purchase of credits, and whether he had access to any material, non-public information or provided such information to the media or the public.