Here’s a memo from Schulte Roth that provides a reminder that you don’t actually have to purchase stock to run afoul of HSR’s notification and waiting period requirements:
On Aug. 10, 2016, Caledonia Investments agreed to settle FTC charges that Caledonia violated the premerger reporting requirements of the Hart-Scott-Rodino Act in connection with the vesting of RSUs in Bristow Group. Pursuant to the settlement, Caledonia agreed to pay $480,000 in civil penalties. According to the government’s complaint, the vesting of the Bristow RSUs was a reportable acquisition of voting securities for which a filing, and observance of the mandatory waiting period, was required.
HSR requires parties to acquisitions of voting securities, non-corporate interests and assets meeting certain annually adjusted thresholds to file notifications with the federal antitrust agencies and to observe a waiting period prior to consummation of the acquisition.
Acquisitions of non-voting securities or convertible securities are considered exempt transactions. However, the subsequent exercise, vesting or conversion into securities with the present right to vote for directors is a potentially reportable “acquisition” that may require that an HSR filing be made, and the waiting period observed, prior to such exercise, vesting or conversion. Failure to comply with HSR’s filing and waiting requirements when required can result in injunctive relief as well as civil penalties of up to $40,000 for each day during which any applicable person is in violation.