Democratic Senators target Carl Icahn biofuel credit activities

Carl Icahn

Eight Democratic Senators have sent a letter concerning Carl Icahn to heads of the SEC, the CFTC and the EPA. CNBC.com photo.

Carl Icahn proposed change to US biofuels program in February

Eight Democratic Senators, including Elizabeth Warren, have requested that US regulators launch an investigation into the activities of Carl Icahn in the US biofuels blending credit market, according to a report by Reuters.

The senators say Icahn may have violated securities trading laws since becoming an unpaid advisor to President Donald Trump shortly after the election in November.

“We are writing to request that your agencies investigate whether Carl Icahn violated insider trading laws, anti-market manipulation laws, or any other relevant laws based on his recent actions in the market for renewable fuel credits,” the senators wrote in a letter to the heads of the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Environmental Protection Agency.

Democratic Senators Elizabeth Warren, Sheldon Whitehouse, Sherrod Brown and five others signed the letter which is a request and the agencies are not required to act upon it.  A copy of the letter has been seen by Reuters.

In February, Icahn proposed a change to the US biofuels program that would ease regulations on refining companies, including CVR Energy Inc, a company in which Icahn holds a majority stake.  His proposal called for regulators to shift the responsibility for blending biofuels into gasoline from refiners to terminal operators.

According to a Reuters review of securities filings in April, CVR had earlier obtained a large short position in biofuels blending credits, or Renewable Identification Numbers (RINs). Refiners are required to purchase RINs under the biofuels law.  With the large short position, CVR would have been in a strong position to profit if RIN prices fell.

 

The senators said shortly after Icahn’s proposal in February was reported, RIN prices dropped sharply.

“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,” the senators wrote.

“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,” they said.

In the first quarter of 2017, CVR Energy’s refining unit posted a net gain of $6.4 million associated with the credits.  This amounts to a $50 million turnaround from the same time last year when CVR paid out $43.1 million, according to a company filing.

In the past, Icahn has argued his proposal to change the biofuels program was not self-serving and would help other refining companies, including his competitors.

The White House is considering the proposal.

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