Today, the Federal Trade Commission announced that Clarence L. Werner, founder of the Omaha, Nebraska-based truckload carrier Werner Enterprises, Inc. will pay a $486,900 civil penalty to settle charges that certain of his acquisitions of company stock while he was a director of the company violated the Hart-Scott-Rodino (HSR) Act.
The HSR Act requires companies and individuals to report stock purchases over a certain threshold to the FTC and DOJ and wait before closing the transaction so that the federal agencies can investigate the potential competitive impact of the acquisition. Smaller transactions may also be reportable under the Act due to the need to aggregate the new purchase with all current holdings. The maximum civil penalty for Werner’s failure-to-file violation is currently $43,792 per day.
“Several of Mr. Werner’s acquisitions were large open-market purchases,” said Holly Vedova, Director of the Bureau of Competition. “As a director of the issuer and an active participant in these transactions, Mr. Werner should have realized that he might have regulatory obligations and sought legal advice. Even more concerning is the fact that he made some of his acquisitions after he learned that some of his prior purchases violated the antitrust laws.”
According to the complaint, on May 14, 2007, when Mr. Werner exercised his stock options to acquire shares of Werner Inc., he failed to make the requisite HSR filing, even though the acquisition, together with his prior holdings of Werner Inc., caused him to cross the $100 million HSR filing threshold, as adjusted. Throughout 2009, Mr. Werner made additional acquisitions of Werner Inc. stock that he did not report, including several large open-market transactions.
Mr. Werner made more acquisitions of Werner Inc. stock on Nov. 20, 2012, by exercising his stock options, and on Feb. 7, 2019, due to the vesting of restricted stock. He again failed to make the requisite HSR filings for each of these transactions even though each acquisition, together with his prior holdings, caused him to cross the $100 million HSR filing threshold, as adjusted. He then made additional acquisitions even after learning that he was in violation of the HSR Act.
The Commission vote to accept the settlement and refer the matter to the Department of Justice for filing was 4-0. The Department of Justice filed the complaint and proposed stipulated order on the FTC’s behalf in the U.S. District Court for the District of Columbia on Dec. 22, 2021.
As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Maribeth Petrizzi, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580 firstname.lastname@example.org. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.