The US Federal Trade Commission (FTC) announced this week that GameStop CEO Ryan Cohen will pay around $1 million in civil penalty for violating antitrust laws regarding his acquisition of Wells Fargo shares.
FTC Fines Ryan Cohen
According to the FTC, Cohen acquired over 562,000 Wells Fargo voting securities, exceeding the HSR filing thresholds. Cohen failed to file the required HSR form with federal antitrust agencies, violating the HSR Act. His acquisition of shares was not exempt under the Investment-Only Exemption. It is alleged that Cohen was influencing Wells Fargo's business decisions while seeking a position on the company's board.
Decline in GameStop Sales
GameStop recently released its financial results for the second quarter of 2024, reporting net sales of $798 million, significantly lower compared to $1.164 billion in the previous year's second quarter. The company's operating expenses were $270.8 million, down from $322.5 million in the last year. The company posted a net income of $14.8 million for the quarter, a major improvement from a net loss of $2.8 million in the previous year's second quarter.
Context and Implications
The HSR Act requires companies and individuals to report large transactions, including securities acquisitions that exceed a certain threshold, to the FTC and the Department of Justice. This reporting allows federal agencies to review deals before they close. The maximum civil penalty for the violation at the time Cohen made the corrective filing was $43,792 per day.
Ryan Cohen agreed to pay a $1 million fine for violating antitrust laws. This case highlights the importance of complying with HSR Act requirements and maintaining transparency in financial transactions.
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