The Federal Trade Commission (FTC) fined Berkshire Hathaway Inc. $896,000 in connection with allegations that the company violated the HSR Act by failing to file an HSR notification for the conversion of notes into voting securities. Berkshire Hathaway acquired notes in USG Corporation in 2008, which were subsequently converted into voting securities in December 2013. The conversion resulted in Berkshire Hathaway exceeding the applicable size-of-transaction threshold, since no HSR filing exemptions were applicable.
This was at least the second time that Berkshire Hathaway submitted a corrective filing to comply with the HSR Act. The company’s previous violation came on June 25, 2013, when it failed to report its acquisition of voting securities of financial services company Symetra. Berkshire Hathaway submitted a corrective HSR filing on July 2, 2013, characterizing its failure to comply as inadvertent. The FTC did not pursue a civil penalty in that case, but required Berkshire Hathaway to institute an effective HSR compliance program.
This second violation, however, led to the imposition of civil penalties. The director of the FTC’s Bureau of Competition, Deborah Feinstein, stated that “[t]he Commission requires compliance with the premerger notification rules, and will not hesitate to seek civil penalties against companies or individuals that fall short of their filing responsibilities. Although we may not seek penalties for every inadvertent error, we will enforce the rules when the same party makes additional mistakes after promises of improved oversight. Companies and individual investors alike should ensure that they have an effective program in place to monitor compliance with HSR filing requirements.”