On July 12, 2016, the U.S. Department of Justice (DOJ) announced that it had reached a settlement in its landmark lawsuit against activist investor ValueAct. As previously reported, the DOJ’s complaint accused ValueAct of improperly relying on the “investment-only” exemption to the Hart-Scott-Rodino Act’s reporting requirements when it failed to report certain acquisitions of securities in connection with a proposed merger between two oilfield services companies.
Pursuant to the parties’ stipulation of settlement and proposed final judgment in the case, ValueAct will pay a record $11 million civil penalty — over half the “at least $19 million” civil penalty sought in the complaint. ValueAct also will agree to a broad injunction against relying on the “investment-only” exemption when it intends to take, or has an investment strategy that identifies the potential for taking, any of several actions enumerated in the proposed final judgment in connection with a transaction subject to Hart-Scott-Rodino. ValueAct’s compliance with the terms of the settlement will be monitored by a compliance officer to be appointed by the company, and subject to ongoing DOJ rights of inspection. The settlement is pending public comment and court approval.