In April 2016, the DOJ sued VA Partners I, LLC, ValueAct Capital Master Fund, L.P. and ValueAct Co-Invest International, L.P. (together, ValueAct) for alleged violations of the pre-merger notification provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). At issue in the case was whether ValueAct was entitled to rely on the so-called “investment only” exemption to the HSR Act filing requirements (Investment Only Exemption). See “DOJ Lawsuit May Limit Ability of Activist Hedge Funds to Rely on ‘Investment Only’ Exemption From Hart-Scott-Rodino Filing Requirements
” (Apr. 14, 2016). On July 12, 2016, the DOJ announced that ValueAct agreed to settle the charges and pay a record $11 million fine. The settlement includes an injunction against certain specified types of conduct which will presumably limit the ability of activist hedge funds to rely on the Investment Only Exemption. This article summarizes the terms of the settlement and its impact on activist hedge funds. For more on activist investing, see “Structures and Characteristics of Activist Alternative Investment Funds
” (Mar. 12, 2015); and our two-part series on “Considerations for Hedge Fund Managers Pursuing Activist Strategies”: “Filing Obligations and Other Operational Considerations
” (May 5, 2016); and “Settlement, Prospects, Shareholder Engagement and Proxy Access Considerations
” (May 12, 2016).