On August 20, 2014, the FTC announced that it fined Berkshire Hathaway Inc. $896,000 for failing to make an HSR filing before converting convertible notes into voting securities of USG Corporation. Berkshire was required to make an HSR filing as the conversion increased its holdings of USG voting securities to over $950 million, greater than the then-applicable HSR filing threshold of $283.6 million (the threshold has since increased to $303.4 million). Although the acquisition of convertible voting securities does not trigger an HSR filing, the conversion of those securities may be reportable under the HSR Act if the HSR thresholds are met and no exemptions apply.

The complaint does not allege that Berkshire was unaware that the conversion triggered an HSR filing, but instead suggests that Berkshire incorrectly thought its acquisition was covered by a previous HSR filing made in 2006. In 2006, Berkshire submitted an HSR filing to acquire USG voting securities. As the result of multiple acquisitions in 2006, Berkshire held approximately 19% of USG's voting securities. Under the HSR Rule 802.21 exemption, where an acquiring party (known as an acquiring ultimate parent entity (UPE)) submits an HSR filing indicating that it will acquire voting securities in excess of a certain threshold and crosses that threshold within one year of the expiration of the HSR waiting period, the acquiring UPE has five years to:

However, once the five-year window expires, the acquiring UPE must refile before acquiring shares if the value of its holdings will be in excess of the HSR threshold.

In November of 2008, Berkshire acquired notes convertible into USG voting securities, and in December of 2013, Berkshire converted the notes into USG voting securities. As a result of the conversion, Berkshire held shares of USG valued in excess of $950 million. Berkshire's 2013 conversion of the notes into USG stock was not covered by the five-year exemption applicable to the acquisition of USG stock following its 2006 HSR filing. Because the five-year window had lapsed before Berkshire converted the notes, it was required to make a new HSR filing before making the conversion.

To remedy Berkshire's failure to file, the FTC imposed the maximum fine of $16,000 a day for each day Berkshire was in violation of the HSR Act. While the FTC did not state its reason for imposing the maximum amount, it did note that Berkshire inadvertently failed to make an HSR filing earlier in 2013 in connection with acquiring Symetra Financial Corporation voting securities by exercising warrants. In the previous failure to file, Berkshire made a corrective filing and was not penalized by the FTC. However, at the time, Berkshire had been told by the FTC's Premerger Notification Office that it was responsible for instituting an effective compliance program to ensure it met its obligations under the HSR Act.

For more on failure to make an HSR filing, see Practice Note, HSR Act Violations: Failure to Make an HSR Filing and HSR Act Enforcement Actions: Comprehensive Civil Penalties Chart.