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GameStop CEO Ryan Cohen Fined Nearly $1M for Antitrust Violation in Wells Fargo Deal

By  |  September 18, 2024

The Federal Trade Commission (FTC) announced today that Ryan Cohen, managing partner of RC Ventures, LLC and Chairman and CEO of GameStop Corp., has agreed to pay a civil penalty of $985,320 to settle charges related to his acquisition of Wells Fargo & Company shares. According to a statement from the FTC, Cohen’s acquisition of these shares violated the Hart-Scott-Rodino (HSR) Act, a federal antitrust law designed to ensure that large transactions are reported to government authorities for review.

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    The complaint filed by the FTC alleges that Cohen, who is also the founder and former CEO of Chewy, Inc., purchased more than 562,000 voting securities of Wells Fargo. This acquisition brought his total holdings above the HSR filing threshold, triggering a legal obligation to file an HSR form with the federal antitrust agencies and wait for the necessary review before completing the transaction. However, Cohen reportedly failed to meet this requirement, violating the provisions of the HSR Act.

    Per the FTC’s statement, the HSR Act mandates that individuals and companies must report acquisitions that surpass certain thresholds, such as the one involved in Cohen’s purchase of Wells Fargo shares. This filing allows both the FTC and the Department of Justice (DOJ) to investigate the transactions before they are finalized. Federal agencies have 30 days after a report is filed to conduct an initial review, during which time it is generally illegal to complete the transaction. The maximum civil penalty for such violations was $43,792 per day at the time Cohen made a corrective filing, per the FTC.

    The complaint also outlined that Cohen’s acquisition of Wells Fargo shares was not exempt under the HSR Act’s Investment-Only Exemption, which applies to investors who acquire shares purely for passive investment purposes. Despite holding less than 10% of Wells Fargo’s voting securities, Cohen was found to have intended to influence the company’s business decisions. According to the FTC’s complaint, Cohen advocated for a board seat and regularly communicated with Wells Fargo’s leadership to provide suggestions aimed at improving the company’s operations.

    The Commission’s unanimous 5-0 vote to accept the settlement and refer the matter to the DOJ underscores the severity of the violation. Per the FTC, the Department of Justice has since filed the complaint and proposed stipulated order on behalf of the FTC in the U.S. District Court for the District of Columbia.

    As part of the settlement process, the proposed order and a competitive impact statement will be published in the Federal Register in accordance with the Tunney Act. Public comments on the settlement will be accepted for a 60-day period, after which the U.S. District Court for the District of Columbia will decide whether to approve the settlement, determining if it aligns with the public interest.

    Source: FTC