Third Point settles with U.S. over 2011 Yahoo disclosures

By Jonathan Stempel

(Reuters) - Third Point LLC, the hedge fund firm run by activist investor Daniel Loeb, has settled U.S. regulatory charges that it failed to properly seek antitrust clearance while it built a big stake in Yahoo Inc (O:YHOO) in 2011.

The settlement, announced on Monday by the U.S. Department of Justice and Federal Trade Commission, resolves claims that Third Point took five weeks too long to tell antitrust regulators it planned an activist stake in Yahoo, after having crossed a threshold requiring disclosure.

Third Point will not pay a fine but entered a five-year agreement to make appropriate disclosures.

The FTC vote was 3-2, with the dissenting commissioners saying the New York-based firm should not have been sanctioned.

A Third Point spokeswoman did not immediately respond to a request for comment.

The federal Hart-Scott-Rodino Act exempts investors who buy up to 10 percent of a company's voting securities from disclosing purchases made only for investment purposes.

U.S. regulators, however, said Third Point amassed Yahoo shares in August and September 2011 with an eye toward finding a new chief executive or taking one or more board seats, including through a proxy battle if needed.

Regulators said Third Point began buying its shares on Aug. 8, 2011, and crossed the threshold for seeking HSR clearance two days later. They said Third Point did not file for such clearance until Sept. 16, 2011.

Loeb ultimately engineered the installation of current Yahoo Chief Executive Marissa Mayer to replace Carol Bartz.

He also won a board seat, which he relinquished in July 2013 when Third Point sold 40 million Yahoo shares to the Sunnyvale, California-based company at a large profit.

Led by Chairwoman Edith Ramirez, the FTC majority found a "significant public interest" in ensuring that investors follow HSR rules that are enforced consistently and transparently.

"The public interest does not hinge on whether Third Point's acquisitions of Yahoo stock were likely to produce any competitive harm," the majority said.

The Republican dissenters, Maureen Ohlhausen and Joshua Wright, said that "as a matter of prosecutorial discretion" no punishment was warranted.

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They said the majority's finding "is likely to chill valuable shareholder advocacy" by subjecting transactions that are "highly unlikely" to raise antitrust issues to heightened disclosure requirements.