Bill Gates is $800,000 lighter in the money clip, after the Federal Trade Commission found he violated federal reporting requirements involving his buying an over $50 million stake in voting securities of Icos Corporation and Republic Services.
The FTC and the Microsoft mastermind agreed to the penalty May 3, the same day the Justice Department filed suit saying Gates should have followed investment notification rules because he had ideas about taking part in Icos business decisions.
The matter began in November 2001, when Gates bought voting securities in Republic; but his Republic securities put him with more than 10 percent of Republic's outstanding shares, the FTC said, while he didn't file under the Hart-Scott-Rodino Act before making the buy and relied "on the exemption from the reporting requirements for acquisitions solely for the purpose of investment. That exemption is limited, however, to holdings that do not exceed 10 percent of the shares. Gates discovered the violation and made a corrected filing on Nov. 16, 2001."
But six months later, after the FTC told Gates there would be no penalty sought because he had corrected that error, Gates bought voting shares in Icos and failed to file under Hart-Scott-Rodino, which put him in violation especially because he sat on the Icos board of directors, the FTC added.
"This case demonstrates the need to become fully aware of the reporting requirements of the HSR Act," said FTC Bureau of Competition director Barry Nigro, announcing the settlement. "Although the Commission has often declined to seek penalties from a party that makes an inadvertent mistake and fails to file, once s/he is aware that s/he doesn?t have a complete understanding of the HSR Act, s/he needs to go back and learn about the Act so s/he doesn?t make a second mistake. The Commission will seek substantial penalties for the second mistake."
The penalty could have been steeper, Nigro said, but Gates' cooperation with the FTC probe into the matter factored in to the lower penalty.
