James D. Dondero

Dallas, TX: (May-21-07) The US Justice Department filed charges against James D. Dondero, a Dallas-based hedge fund manager, alleging that he violated antitrust laws by failing to notify regulators when his stake in a company hit $94 million. In February 2005, James D. Dondero exercised 10,000 options in shares of Motient Corp., a wireless communications company. Dondero had received the options as compensation related to being on Motient's board of directors. Dondero's investment firm, Highland Capital Management LP, already owned 3.5 million shares in the company, which it purchased from 2002 to 2004. An increase in the value of those shares, along with the 10,000 additional shares, brought Dondero's Motient holdings to $94 million. Under federal law, companies or investors that buy more than $50 million of a company must file a pre-merger notification with the Federal Trade Commission and wait 30 days before closing the transaction. Dondero agreed to pay a $250,000 fine to settle charges against him. Dondero and Highland had committed a similar violation in 2004 on a purchase of more than $100 million in Neighborcare Inc., then known as Genesis Health Ventures. [KIPLINGER.COM: SEC NOTIFICATION]

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Published on May-22-07