Leucadia National (NYSE:LUK) has settled charges with the Federal Trade Commission for failing to adequately report its ownership in KCG Holdings after the merger between Knight Capital and GETCO Holding.
Back in 2012, New York based brokerage Jefferies helped broker a $400 million bailout deal for Knight Capital, which suffered from a computer system glitch which caused the company to flood U.S. equity markets with orders.
In November 2012, the largest shareholder of Jeffries, Leucadia National (NYSE:LUK), announced its merger with the brokerage.
At the time of the merger between Knight Capital and GETCO Holding, Leucadia National (NYSE:LUK) acquired a stake totaling about $173 million due to it holding 16.5 million voting shares in Knight Capital.
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According to the Federal Trade Commission (FTC) allegations, the firm has therefore violated federal pre-merger reporting requirements by failing to report the conversion of its ownership interest in Knight Capital Group, Inc..
The FTC is referring to the Hart-Scott-Rodino (HSR) Act, which has been in force since 1976, when antitrust laws in the United States were modified so that parties must notify the FTC and the Department of Justice of transactions above certain nominal thresholds that are affecting certain businesses in the country.
At the time Leucadia National (NYSE:LUK) failed to report the transaction, because it considered itself to be qualified for an exemption applicable to institutional investors. The company made a corrective filing in September 2014, after conceding that the deal was reportable under the HSR Act.
The company already violated the HSR Act in 2007, making the FTC seek a civil monetary penalty this time around.