New Delhi, May 2 (IANS): Carl Icahn, a legend of Wall Street, has made a classic mistake of taking on too much leverage in the face of sustained losses: a combination that rarely ends well, Hindenburg Research said in a new research.

Icahn has been using money taken in from new investors to pay out dividends to old investors. Such ponzi-like economic structures are sustainable only to the extent that new money is willing to risk being the last one "holding the bag", Hindenburg Research said.

Supporting this structure is Jefferies, the only large investment bank with research coverage on Icahn Enterprises (IEP), the research said.

It has continuously placed a "buy" rating on IEP units.

In one of the worst cases of sell-side research malpractice we've seen, Jefferies' research assumes in all cases, even in its bear case, that IEP's dividend will be safe "into perpetuity", despite providing no support for that assumption, the research said.

Since 2019, one bank has run all of IEP's $1.7 billion in ATM offerings: Jefferies. In essence, Jefferies is luring in retail investors through its research arm under the guise of IEP's 'safe' dividend, while also selling billions in IEP units through its investment banking arm to support the very same dividend, the research said.

Icahn Enterprises (IEP) is an $18 billion market cap holding company run by corporate raider and activist investor Carl Icahn, who, along with his son Brett, own approximately 85 per cent of the company.

Given limited financial flexibility and worsening liquidity, we expect Icahn Enterprises will eventually cut or eliminate its dividend entirely, barring a miracle turnaround in investment performance, the report said.

Carl Icahn's relationship with Jefferies & Co (Jefferies) goes back to the corporate raider leveraged buy-out days of the 1980's.

Several articles from the time noted Icahn's ties to the founder of Jefferies, Boyd Jefferies, who eventually pleaded guilty to two felony counts of securities fraud and resigned from the firm he founded.

Jefferies current CEO, Richard Handler, has maintained a close relationship with Carl Icahn over the years.

A 2014 article reported that Icahn helped bail out Jefferies during the global financial crisis. Jefferies now appears to be returning the favour (and collecting fees along the way through its ATM unit sales), Hindenburg Research said.