Ryan Cohen fined $985K for Wells Fargo share acquisition violation

Ryan Cohen, the CEO of GameStop and founder of Chewy, has been penalized by the Federal Trade Commission for failing to comply with the Hart-Scott-Rodino Act during his acquisition of shares in Wells Fargo. In March 2018, Cohen purchased over 562,000 voting securities in Wells Fargo, which pushed his total holdings above the $100 million threshold, necessitating a formal filing and regulatory clearance. However, he did not file the required HSR form, which is essential for federal review of large transactions. The Hart-Scott-Rodino Act mandates that individuals and companies report significant acquisitions to the FTC and the Department of Justice to prevent anti-competitive practices. Cohen's actions were deemed non-compliant as he engaged with Wells Fargo's leadership, indicating an intention to influence the company's operations, which disqualified his holdings from being classified as passive investments. In January 2021, Cohen made a corrective filing for the acquisition that had occurred nearly three years earlier. The FTC's unanimous decision to impose a civil penalty of $985,320 reflects the seriousness of the violation, especially since the maximum penalty at the time was $43,792 per day for such infractions. The case was forwarded to the Department of Justice for further action. This incident highlights the importance of adhering to regulatory requirements in significant financial transactions. Cohen's fine serves as a reminder to other investors about the necessity of compliance with antitrust laws to ensure fair market practices.