GameStop CEO Ryan Cohen took a nearly $1 million penalty for buying Wells Fargo stock

Wednesday, the Federal Trade Commission said Ryan Cohenmanaging partner of RC Ventures and president and CEO of GameStop Corporation (NYSE:GME), will pay a civil penalty of $985,320.

This fine stems from allegations that Cohen violated the Hart-Scott-Rodino Act by failing to comply with required documents during the purchase of stock in Wells Fargo & Company (NYSE:WFC).

Cohen’s actions resulted in a purchase that exceeded HSR filing thresholds, triggering the need for federal antitrust agencies to review the deal.

Also Read: GameStop Analyst Says Retailer May Close All Stores, Run As Bank To Handle Losses.

According to the FTC complaint, Cohen’s purchase of more than 562,000 Wells Fargo voting securities required him to file an HSR form and await regulatory clearance before completing the transaction.

The HSR Act requires companies and individuals to report large transactions to the FTC and Department of Justice to allow for federal review.

According to the complaint, Cohen purchased 562,077 Wells Fargo voting securities in March 2018, bringing his aggregate holdings of Wells Fargo securities past the $100 million mark, which in March 2018 was $168.8 millions of dollars.

Cohen’s purchase was not exempt from the HSR Act’s investment-only exemption.

His emails and interactions with Wells Fargo management, where he pleaded for a board seat and suggested business improvements, indicated an intent to influence the company’s operations. This intention disqualified his holdings from being considered passive investments.

In January 2021, Cohen made a corrective registration under the HSR Act for the March 2018 purchase of voting securities.

By law, it is prohibited to complete a transaction during the 30-day investigation period without approval. At the time of Cohen’s violation, the maximum civil penalty for such offenses was $43,792 per day.

The FTC’s decision to settle the case and forward it to the DOJ for filing was unanimous, with a 5-0 vote.

Last week, GameStop reported second-quarter net sales of $798.0 million, down from $1.16 billion a year ago and missing the consensus of $895.7 million.

The video game retailer reported a profit of 1 cent per share, beating a consensus Street estimate of a loss of 9 cents per share.

Price action: Shares of GME rose 1.50% to $19.94 during the pre-market session last check on Thursday.

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Photo: Courtesy of Bill Jerome on Flickr

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