DOJ Fines ValueAct $11 million for HSR Violation | Practical Law

DOJ Fines ValueAct $11 million for HSR Violation | Practical Law

The Department of Justice (DOJ) fined ValueAct Capital, an activist investment firm, $11 million for failing to make Hart-Scott-Rodino (HSR) Act filings related to its purchase of over $2.5 billion of Halliburton and Baker Hughes voting shares. The settlement also prohibits ValueAct from relying on the investment-only exemption to HSR filings when making activist investments.

DOJ Fines ValueAct $11 million for HSR Violation

Practical Law Legal Update w-002-7836 (Approx. 3 pages)

DOJ Fines ValueAct $11 million for HSR Violation

by Practical Law Antitrust
Published on 12 Jul 2016 • USA (National/Federal)
The Department of Justice (DOJ) fined ValueAct Capital, an activist investment firm, $11 million for failing to make Hart-Scott-Rodino (HSR) Act filings related to its purchase of over $2.5 billion of Halliburton and Baker Hughes voting shares. The settlement also prohibits ValueAct from relying on the investment-only exemption to HSR filings when making activist investments.
On July 12, 2016, the DOJ announced that it obtained an $11 million fine from ValueAct Capital for ValueAct's failure to comply with HSR Act filing requirements related to its purchase of over $2.5 billion of Halliburton and Baker Hughes voting shares.
The DOJ alleged that ValueAct purchased the shares with the intention of influencing the companies' business decisions and could therefore not rely on the investment-only HSR Act filing exemption. The investment-only exemption is narrowly available and is frequently improperly relied on by acquiring ultimate parent entities (UPEs). Under the investment-only exemption, an acquisition of voting securities may be exempt from HSR filing requirements only if:
  • It is made solely for the purpose of investment.
  • As a result of the acquisition, the investor, as an acquiring UPE, will hold 10% or less of the voting securities of the target company.
The fine is the largest ever paid for an HSR violation, eclipsing the previous record of $5.67 million. The settlement also prohibits ValueAct from relying on the investment-only exemption when making purchases intended to influence business decisions.
For more information on the investment-only exemption and violations of the HSR Act for failure to make an HSR filing, see Practice Notes, HSR Act: Investment-Only Exemption and HSR Act Violations: Failure to Make an HSR Filing.