What does our research say about Third Point LLC?

Repeated Violations of Antitrust Premerger Notification Laws: Third Point LLC and its affiliated hedge funds have faced scrutiny from federal regulators for alleged violations of antitrust premerger notification laws. In August 2015, the Federal Trade Commission (FTC) announced a settlement with Third Point regarding their 2011 stock acquisitions in Yahoo! Inc., centering on the funds’ failure to adhere to the premerger filing and waiting requirements mandated by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). Similarly, in August 2019, Third Point faced challenges over their acquisition of shares in DowDuPont Inc., with the FTC alleging failure to file the necessary premerger notifications under the HSR Act.

Misuse of “Investment-Only” Exemption: In both cases, Third Point contended that their acquisitions were exempt under the “investment-only” exemption, which permits acquisitions of up to 10% of a company’s voting securities without triggering HSR Act obligations, provided the investor has no intention of influencing the target’s management. However, the FTC argued that Third Point’s activities—such as discussing possible board members and considering proxy disputes—indicated a purpose beyond passive investment, thereby misusing the exemption.

Financial Penalties and Injunctions: As a result of these violations, Third Point faced financial penalties and injunctions. In the DowDuPont case, the settlement included a $609,810 civil penalty and an injunction against future occurrences of similar offenses, underscoring the importance of strict compliance with premerger notification laws.