GameStop CEO now agrees to pay a $1 million antitrust fine after failing to report the acquisition of more than $100 million in Wells Fargo shares.
Ryan Cohen, the CEO of GameStop, has agreed to pay a civil penalty of nearly $1 million to settle claims from the U.S. Federal Trade Commission (FTC) regarding his failure to report the acquisition of over $100 million in Wells Fargo shares.
Under the Hart-Scott-Rodino Antitrust Act (HSR), individuals and companies are required to report significant transactions, including securities acquisitions that exceed specific thresholds, to the FTC and the Department of Justice.
This reporting allows federal agencies to investigate potential antitrust issues before such deals are finalized.
According to the FTC’s complaint, Cohen acquired more than 562,000 voting securities of Wells Fargo in 2018, which triggered his obligation to file an HSR form.
However, he did not submit this required documentation.
The FTC noted that his acquisition was not exempt under the Investment-Only Exemption of the HSR Act, despite representing less than 10% of Wells Fargo’s total voting securities.
The FTC highlighted that Cohen’s intention behind acquiring the shares was to influence the bank’s business decisions, as evidenced by his emails advocating for a board seat.
Following the acquisition, Cohen reportedly engaged in discussions with Wells Fargo’s leadership, offering suggestions for improving the company and pushing for his potential appointment to the board.
To resolve the charges, Cohen will pay $985,320 to the FTC.
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Also Read: NYSE Is Now Reporting A GameStop Price Glitch
Other Market News Today
Citadel is now fighting the SEC on the market surveillance system known as CAT, which enables regulators to track trading activity.
Citadel Securities is spearheading an industry pushback against a proposal from exchanges like the New York Stock Exchange and Nasdaq that would require traders to help fund a new market surveillance system, known as the Consolidated Audit Trail (CAT), which has already incurred nearly $1 billion in costs.
Brokers are urging regulators to halt new billing schedules that would mandate their financial contributions to the CAT system, which serves as a comprehensive record of all activity in U.S. equities and options markets—often compared to a “Hubble Telescope” for financial markets.
Until now, exchanges have covered the costs of the CAT.
However, if the U.S. Securities and Exchange Commission (SEC) does not intervene soon, brokers will start receiving bills from the exchanges beginning Tuesday, as the exchanges seek to recover a portion of the promised costs.
The CAT was established after the 2010 flash crash, which made it difficult for investigators to determine the cause of a market drop that erased nearly $1 trillion in value.
The system has been fully operational since 2022, according to Financial Times.
The SEC directed national exchanges and Finra, which oversees brokers, to create the CAT, with the expectation that the trading industry would eventually bear a significant share of the expenses.
Last year, the SEC approved a plan requiring broker-dealers to cover two-thirds of the costs, while exchanges would cover the rest.
Initial payment plans were submitted in January but were suspended pending review, which has yet to be completed.
Last month, exchanges and Finra withdrew their initial payment plans and submitted revised ones with minor changes.
Unless the SEC issues another suspension, brokers will receive bills in October based on September’s trading volumes.
Several regulatory filings and letters from industry groups, including Citadel Securities, Virtu Financial, the American Securities Association, and Sifma, have urged the SEC to suspend the billing process.
Citadel Securities, led by Ken Griffin, warned the SEC that it might seek legal action if the billing is not halted by next week.
Also Read: “The Game is Rigged”, Says Ex-Citadel Data Scientist
The company criticized the new filings as an attempt to extract significant amounts from broker-dealers.
Citadel previously challenged the legality of the CAT funding model in a Florida court, in partnership with the ASA.
That case is still ongoing.
Exchange representatives, including those from the NYSE, Nasdaq, and Cboe Global Markets, declined to comment, as did Finra and the SEC.
However, exchange officials noted that they were instructed by the SEC to implement the CAT and that cost-sharing with the industry was always part of the plan.
They argue that increasing trading volumes have contributed to rising costs.
One executive involved in the CAT project stated, “We’re just recovering our costs. There’s no profit here,” emphasizing that the industry had been resistant to funding the system.
Brokers have raised concerns not only about the costs but also about accountability for any costly missteps during the CAT’s development, as well as the system’s annual operating budget, which now nears $200 million—about five times the original estimates from 2016.
In a market where big player such as Citadel have manipulated prices in their favor, reported inaccuracies, and have taken advantage of the industry — opposing any regulatory means that track its trading activity has been part of their mission for years.
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Also Read: BlackRock Is Now Hit With 54 Counts of Securities
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