GameStop CEO Ryan Cohen Penalized Nearly $1M Over Wells Fargo Share Acquisition
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On Wednesday, the Federal Trade Commission said Ryan Cohen, managing partner of RC Ventures and Chairman and CEO of GameStop Corporation (NYSE:GME), will pay a $985,320 civil penalty.
This fine stems from charges that Cohen violated the Hart-Scott-Rodino Act by failing to file the necessary paperwork during his acquisition of shares in Wells Fargo & Company (NYSE:WFC).
Cohen’s actions resulted in an acquisition that exceeded HSR filing thresholds, triggering the need for federal antitrust agencies to review the deal.
Also Read: GameStop Analyst Says Retailer Could Close All Stores, Operate As Bank To Manage Losses.
According to the FTC’s complaint, Cohen’s purchase of more than 562,000 Wells Fargo voting securities required him to file an HSR form and wait for regulatory clearance before completing the transaction.
The HSR Act mandates that companies and individuals report large transactions to the FTC and the Department of Justice to allow for federal review.
As per the complaint, Cohen acquired 562,077 voting securities in Wells Fargo in March 2018, which resulted in his aggregated holdings of Wells Fargo securities exceeding the $100 million threshold, which in March 2018 was $168.8 million.
Cohen’s acquisition was not exempt under the Investment-Only Exemption of the HSR Act.
His emails and interactions with Wells Fargo’s leadership, where he advocated for a board seat and suggested business improvements, indicated an intent to influence the company’s operations. This intent disqualified his holdings from being considered passive investments.
In January 2021, Cohen made a corrective filing under the HSR Act for the March 2018 voting securities acquisition.
Under the law, finalizing a deal during the 30-day investigation period without approval is prohibited. At the time of Cohen’s violation, the maximum civil penalty for such infractions was $43,792 per day.
The FTC’s decision to settle the case and forward it to the DOJ for filing was unanimous, with a 5-0 vote.
Last week, GameStop reported second-quarter net sales of $798.0 million, down from $1.16 billion a year ago and missing the consensus of $895.7 million.
The video game retailer reported a profit of 1 cent per share, beating a Street consensus estimate of a loss of 9 cents per share.
Price Action: GME stock is up 1.50% at $19.94 during the premarket session at last check Thursday.
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Photo: Courtesy of Bill Jerome on Flickr
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