FTC fines Capital One CEO for failing to file stock transaction

Richard Fairbank incurs $637,950 civil penalty over alleged Hart-Scott-Rodino Act violation

Published September 2, 2021 by Katherine Schulte

The Federal Trade Commission fined McLean-based Capital One Financial Corp. CEO Richard Fairbank a $637,950 civil penalty for violating antitrust laws in finalizing stock acquisitions, the FTC announced Thursday. The settlement must be approved by the U.S. District Court for the District of Columbia.

The FTC alleged that Fairbank violated the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 in his acquisition of Capital One stock. In 2018, Fairbank’s compensation package included more than 100,000 Capital One shares, which increased his holdings to $168 million. The complaint alleged that Fairbank failed to report the award to federal antitrust authorities and illegally finalized it before agencies could investigate.

The HSR Act requires companies and individuals to report transactions over a certain threshold to the FTC and the Department of Justice. Thresholds are determined by the size of the transaction and the size of the person involved. In 2021, the size of the transaction threshold is $92 million.

The FTC and the Department of Justice have 30 days after a transaction is reported to conduct an initial investigation and file a second request for additional information. The maximum civil penalty for an HSR violation is currently $43,792 per day.

The FTC alleges that Fairbank failed to file prior to acquiring Capital One voting securities in 1999 and 2004. He made a corrective filing in 2008.

Fairbank violated the HSR Act in 2018 from March 8, 2018, until Jan. 17, 2020, after he had made a corrective filing and observed the 30-day waiting period, according to the FTC.

The FTC settlement was referred to the Department of Justice, which filed the complaint in the U.S. District Court for the District of Columbia on Sept. 2.

The proposed settlement will be published in the Federal Register and will have a 60-day comment period before the U.S. District Court rules. Anyone can send written concerns to U.S. special attorney Maribeth Petrizzi.

Subscribe to Virginia Business. Get our daily e-newsletter.