Harry E. Figgie, Jr. and Figgie International Inc., have agreed to pay a $150,000 civil penalty to settle federal charges that they failed to notify the nation's two antitrust enforcement agencies before Mr. Figgie acquired restricted voting stock in Figgie International, the Federal Trade Commission announced today. The government alleged that the prior notification was required under the Hart-Scott-Rodino (HSR) Act, which is designed to give the government an opportunity to review certain acquisitions and mergers before consummation to determine whether they would violate federal antitrust laws.
The settlement stems from charges filed by FTC staff attorneys, serving as Special Attorneys to the U.S. Attorney General, today. The complaint, filed in U.S. District Court for the District of Columbia, alleges that Harry Figgie, Jr., then Chairman and Chief Executive Officer of Figgie International -- a Willoughby, Ohio-based company that manufactures and sells a variety of consumer and industrial products -- purchased restricted voting shares of Figgie International without observing the notification and waiting requirements of the HSR Act. The Act requires persons contemplating acquisitions of assets, stock or voting securities of other companies, when the transactions meet certain thresholds, to notify the FTC and the Department of Justice, and then to wait a specified period while one of the two agencies reviews the transaction. The notification requirement applies when a voting securities acquisition would bring the value of the purchaser’s holdings in a company to more than $15 million. If the acquisition that results in crossing the $15 million threshold leaves the acquirer with less than 15 percent of the outstanding voting securities of a company, the purchaser might have to file a subsequent notification before increasing its holdings to over 15 percent of the company’s outstanding voting securities. The government alleged that under the HSR Act and Rules, Harry Figgie and the company were required to comply with the HSR requirements, before Figgie acquired additional voting securities that increased his holdings to over 15 percent of the outstanding voting securities of Figgie International.
In July 1988, Figgie purchased voting securities of Figgie International that, when combined with the voting shares previously held by him, brought the value of his holdings above the $15 million threshold but not above 15 percent, the government alleges. Then, in December 1988, the complaint alleges that Figgie purchased restricted voting securities of Figgie International that gave him the right to vote the shares and to receive any dividends attributable to the shares. Under the terms of Figgie International's 1988 restricted stock purchase plan, Figgie was not entitled to sell or dispose of any voting securities until all restrictions were automatically lifted in July 1993.
The complaint alleges that at the time Figgie purchased the shares under the 1988 restricted plan, Figgie acquired beneficial ownership of those voting securities. For purposes of the HSR Act, the complaint alleges, Figgie held the restricted voting securities at the time he purchased them according to Figgie International's restricted stock purchase plan and thus held 13.3 percent of the outstanding voting securities of Figgie International.
In August 1992, the complaint further alleges, Figgie acquired 100,000 additional shares of Figgie International stock, giving him over 15.2 percent of the company's outstanding voting securities. Prior to the August acquisition of additional voting securities, the government alleges, neither Figgie nor Figgie International complied with the HSR Act notification and waiting period requirements. Figgie and Figgie International did not file the required HSR notification on the August 1992 acquisition until October 13, 1993. The HSR Act provides for a civil penalty of up to $10,000 a day for each day that a person is in violation of the act.
The proposed final judgment to settle the charges in this case would compel Figgie and Figgie International to collectively pay the $150,000 civil penalty to the U.S. Treasury within 30 days of the date of approval. The settlement requires the court's approval to become binding.
The complaint and settlement agreement with Figgie International and Harry E. Figgie, Jr. were filed in the U.S. District Court for the District of Columbia on Feb. 13, 1997.
NOTE: This final judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Such settlements have the force of law when signed by the judge.
Copies of the stipulation, final judgment and complaint are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov
(FTC Matter No. 941 0027)
(Civil Action No. 1:97 CV 00302 (Judge Stanley Sporkin))