The CEO of a bank holding corporation settled FTC charges for violations of the notice and waiting period requirements under the Hart-Scott-Rodino Act ("HSR Act").

In a Complaint filed with the U.S. District Court for the District of Columbia, the FTC stated that in 2013, the CEO filed a notification with the DOJ and FTC to acquire voting securities of the corporation that would lead his holdings to be in excess of $168.8 million. The FTC claimed that the CEO was allowed to acquire more of the corporation's voting securities for the following five years without having to submit another HSR Act filing, provided his holdings did not exceed the next reporting level of $843.9 million. The FTC alleged that in March 2015, one month after the CEO's five-year exemption had expired, the CEO acquired voting securities of the corporation that again exceeded $168.8 million without submitting another HSR Act filing, in violation of HSR Act Section 7A ("Premerger notification and waiting period").

Subject to approval from the court, the CEO will pay a $637,950 civil penalty to settle the charges.

At the request of the FTC, the DOJ Antitrust Division filed a related civil antitrust lawsuit against the CEO. The maximum penalty for the CEO's violations is $43,792 per day.


Once again a corporate executive who earns Performance Stock Units ("PSUs") has been tripped up by HSR filing rules and subjected to substantial civil penalties, even though the executive apparently had in place an HSR compliance system with respect to his PSUs. HSR rules are highly complex and not at all intuitive. We strongly recommend that all executives who receive PSUs or stock options consult experienced HSR counsel periodically to make sure they have in place an adequate HSR compliance process.

Primary Sources

  1. FTC Press Release: FTC Fines Capital One CEO Richard Fairbank for Repeatedly Violating Antitrust Laws
  2. FTC Complaint: Richard D. Fairbank
  3. FTC Proposed Final Judgement: Richard D. Fairbank

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