Investment Trust Settling FTC Charges It Violated U.S. Premerger Notification Requirements

The trust is alleged to have failed to report its 2014 purchase of voting shares

Investment Trust Settling FTC Charges It Violated U.S. Premerger Notification Requirements
Image: Pixabay
August 12, 2016

Caledonia Investments plc (Caledonia) has agreed to pay $480,000 in civil penalties to settle allegations made by the Federal Trade Commission (FTC) that the trust purchased voting shares in 2014 in helicopter services company Bristow Group, Inc. (Bristow) but did not report the purchase, thereby violating federal premerger reporting laws.

The complaint alleges that Caledonia first purchased voting shares in Bristow in June 2008 and reported the purchase to U.S. antitrust authorities as required by law under the Hart-Scott-Rodino (HSR) Act. After this purchase, the company made more purchases that it was not required by HSR to report.

"During that same timeframe, however," states the FTC, "two Caledonia employees were designated to serve on Bristow's board. Bristow awards restricted-stock voting securities to its board members, and by agreement, it set aside the securities for the two Caledonia board members for purchase by Caledonia."

These shares vested in February of 2014, at which time Caledonia acquired them. The FTC claims that the company was required by HSR to report this purchase but did not.

Under HSR, if a company has reported an initial purchase of voting shares, it is allowed to purchase more shares from the same issuer as long as doing so does not result in the total holdings of the company crossing a higher reporting threshold over a period of five years subsequent to the first purchase. According to the FTC, Caledonia's 2014 purchase fell outside of that five-year period.

The company claimed that this violation was unintentional and filed a correction in February 2015. However, the FTC decided to pursue civil penalties because Caledonia had violated HSR once before in 1996, making a corrective filing subsequently in 1997.

The FTC voted 4-0 to refer the complaint and proposed stipulated court order to the Department of Justice (DOJ) to be filed in federal court, which the DOJ did on August 10, 2016 in the U.S. District Court for the District of Columbia.

As required by the Tunney Act, both the proposed settlement and the competitive impact statement will be published in the Federal Register. Anyone can submit written comments regarding the settlement during a 60-day comment period. Any such comments should be submitted to Daniel P. Ducore, the assistant director for compliance, at the address stated in the FTC release. When the comment period ends, the U.S. District Court for the District of Columbia can approve the settlement if it finds that doing so is in the interest of the public.