October 16, 2012

FTC Brings Civil Penalty Action for HSR Violation: Investment Only Exemption Did Not Apply

Arnold & Porter Advisory

Among the various exemptions to the HSR Act is the “investment only exemption”  which provides that acquisition of voting securities where the acquirer will not hold 10 per centum of the outstanding voting securities of the issuer.  The FTC construes this exemption very narrowly.  In the view of the FTC, any intention of participating in the business is inconsistent with an investment only intent. In that regard, it also is important to keep in mind contemporaneous disclosures being made in other regulatory filings like an SEC Schedule 13D.  The FTC recently obtained civil penalties where a party failed to file yet contacted the CEO of the target and asked for a Board seat.


Richard E. Baltz
Richard E. Baltz
Senior Counsel
Washington, DC
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