KKR Stock In Spotlight After DOJ Sues Firm For Serial Violations Of Federal Pre-Merger Review Law: Retail’s Unswayed

Shares of KKR & Co Inc (KKR) were in the spotlight on Tuesday after the Justice Department sued the firm and a dozen of its investment advisors and funds for serial violations of federal pre-merger review law.

According to the civil lawsuit, KKR violated the Hart-Scott-Rodino Act at least 16 times by withholding and altering documents and failing to make required filings.

The Justice Department (DOJ) explained in a release that the HSR Act requires parties to a merger, acquisition, or other transaction above a specific size to submit a pre-merger filing to its Antitrust Division and the Federal Trade Commission.

The lawsuit alleges that over the course of two years — 2021 and 2022 — KKR failed to make complete and accurate pre-merger filings for at least 16 transactions.

The complaint even cited internal documents that revealed “a pervasive culture of noncompliance with the HSR Act” at the firm.

“One KKR employee who omitted and altered multiple documents from an HSR Act filing described KKR’s approach to its premerger filing obligations: ‘I’ve always been told less is more.’ In response, a more senior executive replied, ‘I believe in less is more too….,’” said the DOJ.

The DOJ said that the HSR Act authorizes civil penalties for violations of the Act at more than $50,000 per day per violation. “As a result, the maximum penalty for KKR’s alleged violations exceeds $650 million. The complaint also seeks structural relief as well as other equitable relief, including compliance measures,” it said.

Following the development, retail sentiment surrounding KKR on Stocktwits continued to trend in the ‘neutral’ territory (46/100).

KKR has been in the news lately after investment funds managed by the firm and the Public Sector Pension Investment Board (PSP Investments) agreed to acquire a 19.9% interest in American Electric Power’s (AEP) Ohio and Indiana & Michigan transmission companies for $2.82 billion.

Meanwhile, KKR is scheduled to report its fourth-quarter earnings before the opening bell on Feb. 6. Shares of the firm have gained over 75% over the past year.

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