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Payal Shah, Claire Webb, Alan Weinschel, Jun 29, 2007
In Credit Suisse Securities (USA) LLC v. Billing et al., No. 05-1157, 2007 WL 1730141 (U.S., June 18, 2007), the Supreme Court limited the ability of plaintiffs to bring antitrust claims for conduct that is regulated under the securities laws. On June 18, 2007, the Court by a 7-1 vote (with Justice Kennedy not participating) reversed a Second Circuit Court of Appeals decision, and held that the securities laws implicitly preclude the application of the antitrust laws to conduct involving initial public offerings (IPOs) that was challenged in that case. Billing is the first securities industry antitrust case addressing the issue of implied repeal that the Supreme Court has heard since 1975, when it issued its decisions in Gordon v. New York Stock Exchange, 422 U.S. 659 (1975), and United States v. National Association of Securities Dealers, 422 U.S. 694 (1975).
In Billing, a putative class of investors alleged that investment banks and institutional investors had violated the antitrust laws in connection with the sale of IPOs for several hundred technology-related companies. Id. at 1. In particular, the investors alleged unlawful agreements not to sell IPO securities to a buyer unless the buyer agreed (1) to buy additional shares of that security later at escalating prices (known as “laddering”), or (2) to pay unusually high commissions on subsequent securities purchases, or purchase other, less desirable securities (known as “tying”). Id.
In deciding that the antitrust laws were impliedly repealed as to the challenged conduct even though it allegedly was improper under both the securities and antitrust laws, the Court discussed the following factors: (1) whether the conduct in question is subject to the authority of the Securities and Exchange Commission (SEC); (2) whether the SEC has exercised that authority; and (3) whether application of both the antitrust laws and the securities laws in this context would likely produce conflicting guidance, requirements, duties, privileges or standards of conduct. Id. at 14. The Court also emphasized the extent to which the practices at issue lie within the “heartland” of the securities laws.
