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Berkshire Hathaway hit with fine by FTC for antitrust violation

Texas investors may be interested in the nearly-million dollar fine that one major investment firm must pay after failing to comply with federal antitrust law that is designed to ensure protection against anti-competitive behavior. The Hart-Scott-Rodino Act requires a company that is increasing their holding in another company beyond a certain threshold to report this increase to the government in advance. In doing so, the government will then be able to determine whether or not this increase will affect the industry competition in a substantial way.

On Dec. 9, 2013, investment firm Berkshire Hathaway converted debt holdings in USG Corporation into shares of common stock, increasing its ownership beyond the government's threshold for reporting. This was done, Berkshire noted in an SEC filing, because shares of USG at the time held more value than if the debt would have been redeemed.

Berkshire Hathaway, the Federal Trade Commission says, failed to provide notification of the proposed increase in its holdings before going through with the conversion. The investment firm led by billionaire Warren Buffett had made a similar error in 2013 when it purchased shares of Symetra Financial. At the time, the FTC did not institute fines since Berkshire insisted it would improve its regulation compliance. However, after this incident, the FTC is fining Berkshire a total of $896,000, consisting of $16,000 per day for the 56 days of the mandatory waiting period demanded by the regulations.

Federal securities and antitrust laws can be extremely complicated and difficult for a company to comply with if they do not have competent legal representation. An attorney with experience in regulation compliance may be able to help ensure that the proper documents are timely filed with the FTC and SEC in order to avoid these types of penalties.

Source: NBR, "Buffett’s Berkshire pays $896,000 for second error", Alex Crippen, August 20, 2014

Source: NBR, "Buffett’s Berkshire pays $896,000 for second error", Alex Crippen, August 20, 2014