The US Supreme Court handed Wall Street underwriters a major victory on Monday by ruling that an antitrust lawsuit against them over the pricing of initial public stock offerings (IPOs) cannot go forward.
By a 7-1 vote, the justices reversed a ruling by a US appeals court in New York that the lawsuit by buyers of Internet and technology stock issues in the late 1990s could proceed. "We must interpret the securities laws as implicitly precluding the application of the antitrust laws to the conduct alleged in this case," Justice Stephen Breyer wrote in the 20- page majority opinion.
The lawsuit accused the big investment banks of conspiring to impose anti-competitive charges on prospective buyers and inflating share prices in the post-IPO aftermarket for some 900 initial public offerings.
The ruling was a victory for the big investment banks, including Credit Suisse Group, J.P. Morgan Chase & Co, Merrill Lynch & Co Inc and Morgan Stanley, which had appealed to the Supreme Court. The Supreme Court's ruling said the underwriters should be immunised from such an antitrust lawsuit because the US Securities and Exchange Commission regulates the conduct at issue.
Breyer said that to permit antitrust lawsuits such as this one threatened serious securities-related harm. He said the SEC has the expertise to distinguish what is forbidden from what is allowed. Breyer also said any enforcement-related need for an antitrust lawsuit is unusually small. The SEC actively enforces the rules and regulations for the conduct at issue, he said.
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