Investment Firm Pays $720,000 Civil Penalty for Purchasing Additional Shares without Filing HSR

Morrison & Foerster LLP
Contact

At the request of the Federal Trade Commission (FTC), the U.S. Department of Justice (DOJ) last week filed civil charges against MacAndrews & Forbes Holdings Inc. (MacAndrews) for failing to comply with the Hart-Scott-Rodino Act (HSR) antitrust reporting requirements regarding the acquisition of voting securities. The DOJ action against MacAndrews is only the latest example of the antitrust agencies obtaining civil penalties from an investor who has a track record of failing (albeit unwittingly) to make necessary HSR filings for the purchase of additional shares to grow their minority interest in existing holdings. This action and the sizable civil penalties reinforce the point that investors need to exercise care and diligence when purchasing additional shares to ensure they satisfy regulatory requirements.

An HSR filing to acquire a non-controlling interest in a company generally provides some flexibility to acquire additional voting shares, but the HSR rules substantially constrain that flexibility by (a) requiring an additional HSR filing if the subsequent acquisition would cross one of a series of incremental HSR reporting thresholds relating to the value and percentage holdings in the target company, and (b) imposing a five year limit on the effectiveness of the original HSR approval. In this instance, each of those limitations was an issue for MacAndrews.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP | Attorney Advertising

Written by:

Morrison & Foerster LLP
Contact
more
less

Morrison & Foerster LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.