Leucadia National Corporation to Pay $240,000 to Settle FTC Charges It Violated U.S. Premerger Notification Requirements

Holding company Leucadia National Corporation has agreed to pay $240,000 in civil penalties to resolve Federal Trade Commission allegations that it violated federal premerger reporting laws by failing to report a conversion of its ownership interest in the financial services company Knight Capital Group, Inc.

In July 2013, Knight Capital consolidated with another financial services company, GETCO Holding Company, LLC to become KCG Holdings, Inc. That transaction converted Leucadia’s ownership interest in Knight Capital into nearly 16.5 million voting shares of the new entity, KCG Holdings, worth approximately $173 million.

The FTC charged that Leucadia was required by law to report the transaction to U.S. antitrust authorities. Under the Hart-Scott-Rodino Act, parties must notify the FTC and the Department of Justice of large transactions above certain dollar thresholds that affect commerce in the United States and otherwise meet the statutory filing requirements.

Leucadia did not report the transaction, according to the complaint, because it thought that it qualified for an exemption applicable to institutional investors. Although Leucadia consulted experienced HSR counsel in connection with the transaction, their counsel erroneously concluded that the exemption applied. Leucadia made a corrective filing in September 2014, acknowledging that the acquisition was reportable under the HSR Act.

Even though Leucadia relied on the advice of counsel, the FTC determined to seek civil penalties because, as noted in the complaint, Leucadia had previously violated the HSR Act in 2007, which led to a corrective filing in 2008.

Although the FTC did not pursue a civil penalty against Leucadia for the 2007 violation, its Premerger Notification Office informed Leucadia at that time that it “still must bear responsibility for compliance with the Act,” and that it was accountable for instituting a program to comply with the HSR Act.

The Commission vote to refer the complaint and proposed civil penalty order to the Department of Justice for filing in federal court was 5-0. The Department of Justice filed the complaint and proposed order in the U.S. District Court for the District of Columbia on September 22, 2015.

NOTE: The Commission refers a civil penalty complaint to the DOJ for filing when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The proposed order has the force of law when entered by the court.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave., NW, Room CC-5422, Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.