Today, the Federal Trade Commission announced that Ryan Cohen, managing partner of RC Ventures, LLC, and Chairman and CEO of GameStop Corp., will pay a $985,320 civil penalty to settle charges that his acquisition of Wells Fargo & Company shares violated the Hart-Scott-Rodino (HSR) Act.
According to the complaint, Cohen, who is also the founder and former CEO of Chewy, Inc., acquired more than 562,000 Wells Fargo voting securities resulting in aggregated holdings of Wells Fargo securities that exceeded HSR filing thresholds. Cohen’s purchase triggered an obligation to file an HSR form with federal antitrust agencies and wait before completing the acquisition. Yet Cohen failed to do so, which violated the HSR Act.
The HSR Act requires companies and individuals to report large transactions, including securities acquisitions over a certain threshold, to the FTC and DOJ so that the federal agencies can investigate the deals before they close. The agencies have 30 days after a transaction has been reported to conduct an initial investigation and file a “second request” demand for additional information. It is generally illegal to finalize an acquisition during this investigatory period. The maximum civil penalty for an HSR violation at the time Cohen made the corrective filing was $43,792 per day.
According to the complaint, Cohen’s acquisition of Wells Fargo voting securities was not exempt under the Investment-Only Exemption of the HSR Act, even though his holding represented less than 10 percent of the outstanding voting securities of Wells Fargo.
When acquiring the Wells Fargo shares Cohen intended to influence Wells Fargo’s business decisions as evidenced by Cohen’s emails when he advocated for a board seat. After acquiring the shares, Cohen proceeded to have periodic communications with Wells Fargo’s leadership regarding suggestions to improve Wells Fargo’s business and to advocate for a potential board seat.
The Commission vote to accept the settlement and refer the matter to the Department of Justice for filing was 5-0. The Department of Justice filed the complaint and proposed stipulated order on behalf of FTC in U.S. District Court for District of Columbia.
As required by Tunney Act, proposed settlement along with competitive impact statement will be published in Federal Register. Any person may submit written comments concerning proposed settlement during 60-day comment period to Maribeth Petrizzi, Special Attorney United States c/o Federal Trade Commission 600 Pennsylvania Avenue NW Washington DC 20580 bccompliance@ftc.gov. At conclusion of 60-day comment period U.S. District Court for District Columbia may approve proposed settlement upon finding it is in public interest.
The Federal Trade Commission works to promote competition and protect consumers. The FTC will never demand money or make threats or tell you transfer money or promise you prize. You can learn more about how competition benefits consumers or file antitrust complaint. For latest news resources follow FTC on social media subscribe press releases read blog.
