Capital One Financial Corp. (NASDAQ: COF) CEO Richard Fairbank agreed to settle a complaint by the Federal Trade Commission (FTC) alleging that he violated antitrust laws.
According to the FTC, Fairbank agreed to the proposed final judgment ordering him to pay a civil penalty of $637,930 to resolve the charges against him in connection with his acquisition of Capital One securities in 2018.
In the civil antitrust complaint, the FTC alleged that Fairbank failed to comply with the pre-transaction notification and the waiting period requirements of Section 7A of the Clayton Act, commonly known as the Hart-Scott-Rodino Act of 1976 (HSR Act)
The HSR Act requires individuals and companies acquiring voting securities or assets that meet certain size thresholds to file notifications with the Department of Justice (DOJ) and the FTC to conduct a pre-transaction antitrust review. The law also requires acquiring entities to observe a waiting period before consummating certain acquisitions of voting securities or assets.
Under the law, the DOJ and the FTC have 30 days to perform an initial investigation and file a second request for more information after receiving a notification regarding a transaction. It is illegal to finalize the acquisition of securities during the agencies’ investigatory process.
In the complaint, the FTC alleged that Fairbank violated the HSR Act twice in connection with his multi-million dollar compensation package in 1999 and 2004.
During the relevant period, the Capital One CEO allegedly failed to file notifications with the FTC and the DOJ before acquiring the company’s voting securities. The FTC did not impose a civil penalty for his wrongdoing.
In 2008, Fairbank submitted a corrective filing and argued that his filing failure was unintentional. He also promised to implement a measure to ensure that he will not repeat his mistakes in the future.
Despite warnings, Fairbank again violated the HSR Act from March 8, 2018, until he made a corrective filing and observed the 30-day waiting period, which ended on Jan. 17, 2020, according to the FTC.
In a statement, FTC Bureau of Competition Acting Director Holly Vedova said, “As the CEO of one of America’s largest banks, Richard Fairbank repeatedly broke the law. here is no exemption for Wall Street bankers and powerful CEOs when it comes to complying with our country’s antitrust laws.”
The DOJ’s Antitrust Division filed the civil antitrust complaint against Fairbank at FTC on behalf of the United States government. The Justice Department also filed the proposed settlement subject to approval by the U.S. District Court for the District of Columbia.
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