Common Failure to File Scenarios

Although failures to file occur in many different circumstances, the PNO sees two specific scenarios very frequently.

Acquisitions by company executives, officers, and directors

  • Some individuals in these positions are not at all aware of the HSR Act and potential filing obligations.
  • Others do not properly aggregate shares they already hold, per 16 CFR 801.13(a), with the shares they plan to acquire. In particular, exercise of even a very small number of options or warrants with a value well below the size of transaction threshold can trigger a filing if the shares already held have appreciated.

Acquisitions that are no-longer eligible for the 802.9 exemptions

  • A passive investor, which has relied on the investment only exemption in Section 802.9 of the HSR Rules, needs to carefully track the percentage it holds. Any acquisition that would result in holding more than 10% is ineligible for the 802.9 exemption, regardless of the investor's continued passive intent.
  • Further, if a passive investor no longer has a purely passive intent, it is no longer able to use 802.9 for subsequent acquisitions.

Other scenarios which may lead to failures to file are covered in the following blog post: