Risk & Compliance

Third Point Fined Over Antitrust Violations

The activist fund allegedly failed to comply with premerger notification rules before acquiring stock in DowDuPont two years ago.
Matthew HellerAugust 29, 2019

Activist investor Third Point has agreed to pay more than $600,000 to settle charges that three funds it controls failed to obtain antitrust clearance before acquiring stock in DowDuPont.

The U.S. Federal Trade Commission said Third Point violated the premerger notification and waiting period requirements of the Hart-Scott-Rodino Act when its Dow shares converted in August 2017 to shares of the newly formed DowDuPont worth about $890 million following the merger of Dow and E.I. du Pont de Nemours.

Hart-Scott-Rodino requires companies involved in an acquisition of stock worth more than $80.8 million to notify the FTC and the Department of Justice before consummating the deal and observe a 30-day waiting period after they file the notification.

The three Third Point funds — Third Point Partners Qualified LP, Third Point Ultra Ltd., and Third Point Offshore Fund Ltd. — “failed to file and observe the HSR waiting period, and Third Point LLC failed to file on behalf of the three funds even though it had the power and authority to do so,” the FTC said in a news release.

Third Point agreed to pay $609,810 in civil penalties to settle a civil complaint that the DOJ, acting on behalf of the FTC, filed simultaneously with the settlement.

The hedge fund, which invests roughly $15 billion in securities around the world and is run by billionaire investor Daniel Loeb, had filed under Hart-Scott-Rodino to acquire its stake in Dow in April 2014.

According to the FTC, Third Point’s acquisition of the DowDuPont shares was not exempt from the HSR Act because DowDuPont was a different entity from Dow. Among other things, it competes in additional lines of business, the commission noted.

Third Point in 2015 settled allegations that it failed to comply with Hart-Scott-Rodino when it built a position in Yahoo, entering into a five-year agreement to make all appropriate filings.

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