The Justice Department is investigating whether some private equity firms can have intentionally withheld information in previous mergers, a senior official said Wednesday.
Richard Mosier, special counsel for personal equity within the DOJ’s antitrust division, said the agency has “renewed its focus” on ensuring that personal equity firms comply with federal law requiring corporations to tell antitrust regulators of their transactions, often called Hart-Scott-Rodino or HSR Act.
Companies that “attempt to game the system risk having this HSR and possibly previous HSRs scrutinized.” “The person who signs the form is making themselves liable,” Mosier said at a conference in Washington.
Mosier declined to call corporations involved within the investigation. KKR & Co. previously said the Justice Department is reviewing the accuracy of its merger filings for some transactions in 2021 and 2022. In December, the corporate said it received a grand jury subpoena regarding the accuracy of its filings, a sign that the agency had launched a criminal investigation.
KKR declined to comment.
He quoted February comments from one other senior DOJ official, who said that personal equity firms must fully comply with merger reporting laws and that failure to supply disclosure “poses an existential threat” to merger enforcement.
Under President Joe Biden, the Justice Department is tightening its oversight of the private equity industry. There is extensive research into overlapping board seats that focuses on the sector. The enforcement push is predicated on a rarely invoked antitrust ban against so-called interlocking directorates, during which the identical people or organizations hold board seats at competing corporations.
When reviewing merger applications, the law requires an organization to release documents, including studies, analyzes and reports prepared for the corporate’s board of directors or officers a couple of transaction, along with a filing form. Mosier said the concerns largely focus on corporations’ failure to show over all required documents and that the agency shouldn’t be taking a look at “random” situations where an organization forgets a thing or two.
