A Blockbuster Inc creditor, Lyme Regis Partners LLC, is suing billionaire investor Carl Icahn over the conversion of his equity stake to debt. The creditor claims Carl Icahn and his investment vehicles used their position of power and inside information to sell their equity interests and essentially convert them into a potentially controlling debt stake.
Insider Monkey isn’t so sure that this will qualify as illegal insider trading. Blockbuster hasn’t been performing well for a while now and nobody was shocked when Blockbuster filed for bankruptcy. If Carl Icahn converted his equity holdings after he learned that Blockbuster’s plan to file for bankruptcy protection was imminent, then the SEC should at least consider investigating the case.
The problem with Carl Icahn’s transactions is that he’s an insider in more than a dozen companies. He’s also an activist investor, going in and out of positions frequently. Some of his decisions may potentially be affected by what he hears inside boardrooms. Prosecutors and regulators usually refrain from pursuing the insider trading cases which may or may not be illegal.
Carl Icahn Previously on Insider Monkey: