Caledonia Investments, a U.K. investment trust company, recently agreed to pay a $480,000 fine to resolve allegations that it violated the notice and waiting period of the Hart-Scott-Rodino Act (HSR). United States v. Caledonia Investments, 16-CV-1620 (D. D.C. Aug. 10, 2016). This settlement was notable both because of the size of the fine and because it was imposed notwithstanding the fact that Caledonia self-reported the violation and made a corrective filing.
More than a year and a half after Caledonia self-reported the violation in February 2015, the FTC sued Caledonia for civil penalties. According to the complaint, Caledonia violated HSR in 2014 by failing to report the vesting and purchase of additional voting shares in Bristow Group. HSR requires companies to report many, but not all, transactions (including mergers, tender offers, asset purchases and security acquisitions) in which the purchaser will “hold” assets or voting securities in excess of the reporting threshold, which is $78.2 million in 2016. Importantly, this threshold is cumulative, thus the word “hold.” In other words, if a buyer already holds $50 million in non-exempt voting securities or assets and then later purchases an additional $50 million, the second transaction is reportable, assuming no other exemptions apply. Once a transaction is reported, the HSR rules allow the purchasing of additional shares during a five-year period following the initial purchase so long as the purchaser’s total holdings do not cross the next higher reporting threshold ($156.3 million and $781.5 million in 2016).
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