Phillip Goldstein is the co-founder of Bulldog Investors. This post is based on a comment letter regarding the ValueAct settlement. The ValueAct settlement was previously discussed on the Forum here, here, and here. Related research from the Program on Corporate Governance includes The Long-Term Effects of Hedge Fund Activism by Lucian Bebchuk, Alon Brav, and Wei Jiang (discussed on the Forum here), The Myth that Insulating Boards Serves Long-Term Value by Lucian Bebchuk (discussed on the Forum here).
The announced settlement of the referenced matter appears to be a product of coerced capitulation rather than of the parties’ relative assessments of the merits. It appears that ValueAct, in response to the FTC’s post-litigation decision to dramatically increase the penalties for violations of the Hart-Scott-Rodino Antitrust Improvements Act (the “HSR Act”) and to apply them retroactively, made a rational decision to settle. [1] As a result, the settlement avoids judicial scrutiny of, and perpetuates (by virtue of its in terrorem effect) a rule that, as explained below, should never have been adopted. For those reasons, the settlement is not in the public interest.
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