The Federal Trade Commission (FTC) has imposed a $985,320 civil penalty on Ryan Cohen, the managing partner of RC Ventures and Chairman and CEO of GameStop Corporation (GME). This fine stems from Cohen’s violation of the Hart-Scott-Rodino Act (HSR Act), which requires companies and individuals to file paperwork for large acquisitions, allowing for federal antitrust review.
The FTC alleges that in March 2018, Cohen acquired more than 562,000 Wells Fargo voting securities, pushing his aggregated holdings of Wells Fargo securities above the $100 million threshold, which at the time was $168.8 million. This triggered the need for an HSR filing, which Cohen failed to do.
The FTC’s complaint argues that Cohen’s acquisition was not exempt under the Investment-Only Exemption of the HSR Act. Emails and interactions between Cohen and Wells Fargo’s leadership, where he advocated for a board seat and proposed business improvements, indicated an intent to influence the company’s operations. This disqualifies his holdings from being considered passive investments.
In January 2021, Cohen finally filed a corrective HSR form for the 2018 acquisition. The HSR Act prohibits finalizing deals during the 30-day investigation period without approval. At the time of Cohen’s violation, the maximum daily penalty was $43,792.
The FTC’s decision to settle the case and refer it to the Department of Justice for filing was unanimous.
This news comes as 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. However, 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.
GME stock was up 1.50% at $19.94 during the premarket session at last check Thursday.
