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Tag: Federal Trade Commission (FTC)

  • FTC slaps GameStop CEO with $1 million fine over Wells Fargo shares

    FTC slaps GameStop CEO with $1 million fine over Wells Fargo shares

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    Gamestop Corp. Chief Executive Officer Ryan Cohen will pay almost a $1 million penalty over allegations that he violated antitrust law with his acquisition of shares in Wells Fargo & Co.

    Cohen failed to file a form he was required to submit to antitrust agencies under the Hart-Scott-Rodino Act after his Wells Fargo share purchases exceeded a certain threshold, according to a statement Wednesday from the Federal Trade Commission.

    As he amassed those shares, Cohen periodically emailed Wells Fargo’s leadership — including its chief executive officer — with suggestions to improve its business and to seek a board seat. That effort to “influence Wells Fargo’s business decisions” meant he couldn’t claim an “investment-only” exemption under the HSR, according to the FTC.

    “When acquiring the Wells Fargo shares Cohen intended to influence Wells Fargo’s business decisions as evidenced by Cohen’s emails when he advocated for a board seat,” the FTC said in its statement.

    Cohen agreed to the settlement with the FTC without admitting any wrong doing. The settlement isn’t final until a federal judge approves it.

    A representative for Wells Fargo declined to comment. Cohen couldn’t immediately be reached for comment. 

    Cohen, who is also the managing partner of RC Ventures LLC and co- founder of Chewy Inc., began buying Wells Fargo shares in 2016, according to the complaint filed by the Department of Justice on the FTC’s behalf in US District Court for the District of Columbia.

    Cohen emailed Wells Fargo’s CEO in February 2018 “to advise him of the contributions he could make” should he become a member of the bank’s board, according to the complaint. Cohen also made suggestions on how Wells Fargo could improve operations like its technology and mobile app. Cohen continued such communications with the bank’s leadership until at least April 2020, it said.

    In March 2018, Cohen acquired more than 562,000 of Wells Fargo shares, resulting in his aggregate holdings surpassing the HSR’s threshold, which at that time was $168.8 million on an adjusted basis. He will pay a $985,320 civil penalty for failing to file the HSR form.

    “Cohen’s intent when he made the March 22, 2018, acquisitions of Wells Fargo voting securities was to participate ‘in the formulation, determination, or direction of the basic business decisions”’ of Wells Fargo, according to the complaint. 

    Cohen continued to buy shares through September 2020. He made a corrective HSR filing in January 2021 for his March, 2018 purchases, according to the complaint. 

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    Sally Bakewell, Hannah Levitt, Bloomberg

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  • Ex-Twitter exec claims Elon Musk's cost-cutting zeal gutted a federal agreement—and says he was fired for sounding the alarm

    Ex-Twitter exec claims Elon Musk's cost-cutting zeal gutted a federal agreement—and says he was fired for sounding the alarm

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    A former Twitter manager is suing Elon Musk and his social media company X in a New Jersey court, alleging the worker was wrongfully fired for trying to make sure X — formerly Twitter — held up its part of a government agreement.

    Alan Rosa served as head of global information technology and information security from his remote home office in the Garden State for 10 months in 2022—until he was fired a few weeks after the tycoon bought the company. 

    Earlier that year Twitter had been fined $150 million for previously exploiting personal data from users for commercial purposes without informing them. A Federal Trade Commission consent decree subsequently required Twitter to establish a comprehensive information security program including the introduction of new compliance measures to prevent further abuses.

    On Dec. 6 Rosa was dismissed, he claims, because the new owner sought to make cuts in the budget, including software that shared important information with law enforcement authorities around the world.

    The legal team argued that Musk knew full well the cuts would risk Twitter breaching government agreements, such as that with the FTC, but was “consistently dismissive” of his obligations.

    Rosa “objected to these cuts as he had a reasonable belief that cutting these programs would prevent Twitter from complying with its obligations under the Twitter FTC Consent Decree Order,” the lawsuit says, adding that Rosa was fired “in retaliation” for his refusal.

    Not only did Twitter never provide a cause for his termination, it refused to pay out the severance and benefits totaling well over half a million dollars it promised Rosa, pending the results of a new probe into his conduct as employee.

    “Defendants acted maliciously and willfully in creating a pretextual sham investigation regarding Plaintiff’s conduct,” the suit claims. 

    Seeking unspecified damages

    The allegations that Musk cooked up an excuse to short-change Rosa are, at the very least, in character. In his official biography of Musk, Walter Isaacson revealed how his subject bragged about hatching a secret plan to fire then-Twitter head Parag Agrawal without severance over a vendetta Musk had with the former CEO.

    Rosa’s legal counsel, the firm Deutsch Atkins & Kleinfeldt, P.C., claims his termination equates to a breach of contract and is unlawful under New Jersey regulations. It furthermore violates New York labor law and the California Labor Code, his lawyers argue. 

    An initial attempt by the two sides to resolve the dispute in arbitration failed after Twitter never responded to emails from the arbitrator and never paid its portion of the fee, despite signing an agreement to do so.

    In addition to all legal and attorney costs, Rosa is seeking unspecified compensatory damages, punitive damages and emotional damages, as well as any other relief deemed appropriate by the court.

    Fortune reached out for comment to X’s public relations account, which under Musk had automated to reply at all times with a poop emoji. Under CEO Linda Yaccarino, that has since been changed to “busy now, please check back later.”

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    Christiaan Hetzner

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