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FTC Fines Investor $656, 000 for Violating HSR Requirements
Practical Law Legal Update w-000-6364 (Approx. 3 pages)
FTC Fines Investor $656,000 for Violating HSR Requirements
by Practical Law Antitrust
| Published on 06 Oct 2015 • Alabama, USA (National/Federal) |
The Federal Trade Commission fined investor Len Blavatnik $656,000 in civil penalties for failing to report his acquisition of voting shares in technology start-up TangoMe in Aug 2014, his second alleged violation of the HSR Act.
On October 6, 2015, the Federal Trade Commission (FTC) announced that it fined investor Len Blavatnik $656,000 in civil penalties for failing to report an acquisition of voting shares in technology start-up TangoMe, in violation of the Hart-Scott-Rodino (HSR) Act.
Violation
The FTC alleged that through his company Access Industries, Blavatnik acquired shares of TangoMe, Inc. on August 6, 2014, that increased the value of his holdings in the company to approximately $228 million. Because the value of the holdings exceeded the then-threshold for the HSR size-of-transaction reporting requirement ($75.9 million), and the size-of-person threshold was met, Blavatnik was required, and failed, to report the acquisition.
Blavatnik made a corrective filing on December 17, 2014, and the waiting period expired on January 16, 2015. The US District Court for the District of Columbia ordered Blavatnik to pay $656,000, or approximately $4,025 per day for each of the 163 days Blavatnik was in violation of the HSR Act, from August 6, 2014 to January 16, 2015.
Previous Violation
In its complaint, the FTC alleged that Blavatnik had previously failed to make an HSR filing in connection with his August 2010 acquisition of voting securities in LyondellBasell Industries N.V. In December 2010, Access Industries, an entity Blavatnik controls, made a corrective filing on Blavatnik's behalf. In a letter to the FTC, Blavatnik asserted that:
- The failure to file was inadvertent.
- He and Access would consult HSR counsel before acquiring more voting securities.
The FTC Premerger Notification Office did not penalize Blavatnik or Access for the first failure to file, but warned that Blavatnik remained accountable for:
- Compliance with the HSR Act.
- Instituting an HSR compliance program.
The FTC alleged that regarding the TangoMe acquisition, Blavanik and Access neither:
- Conducted any HSR review of the proposed acquisition.
- Consulted with HSR counsel.
This is the third HSR enforcement action announced in the last two months, coming after the FTC:
- Fined Leucadia National Corporation $240,000 for failure to comply with HSR requirements in a 2013 conversion of ownership interests (see Legal Update, Bad Advice from HSR Counsel Costs Leucadia National $240,000).
- Required injunctive relief in United States v. Third Point Offshore Fund, Ltd. for an alleged violation of Rule 802.9 preventing the acquiring UPEs from relying on that exemption where they engaged in certain activity in the four months before making an acquisition that would otherwise be HSR-reportable, such as nominating a candidate for the target’s board of directors (No. 1:15-cv-01366, Final Judgment (D.D.C. Aug. 24, 2015)).
For more information on civil penalties for violation of the HSR Act, see HSR Act Enforcement Actions: Comprehensive Civil Penalties Chart and Practice Note, HSR Act Violations: Failure to Make an HSR Filing.