U.S. Supreme Court

SG View Fails in Antitrust Case

The position advanced by the U.S. Solicitor General failed when the U.S. Supreme Court issued a decision yesterday favoring Wall Street in an antitrust case.

The court held that investment banks may not be sued under antitrust laws for conspiring to fix prices of initial public offerings.

Such behavior is allowed under securities laws, Justice Stephen G. Breyer wrote for the court. To allow antitrust suits would subject the banks to conflicting requirements and threaten harm to efficient functioning of financial markets.

Linda Greenhouse writes for the New York Times that U.S. Solicitor General Paul Clement had “tried to sell an awkward compromise between the competing views of two federal agencies.” The Securities and Exchange Commission had supported the defendants and the Justice Department’s Antitrust Division had supported the plaintiffs.

Clement had argued a federal appeals court decision reinstating the lawsuit failed to provide enough protection to securities laws’ policy of encouraging certain collaborative behavior. But the plaintiffs should have a chance to rewrite their complaint in a way that makes that accommodation, he maintained.

Breyer said the government position does not address “the difficulty of drawing a complex, sinuous line separating securities-permitted from securities-forbidden conduct.”

Tony Mauro of Legal Times reports that Breyer’s deference to the SEC “could mark a new high-water mark for the regulatory state that could be applied in other contexts, including telecommunications and environmental law, where it could be argued that regulators have more expertise than courts.”

The Wall Street Journal saw the opinion as “another milestone in the court’s recent movement to free markets from the cost and complications of plaintiff lawsuits.”

The opinion is Credit Suisse Securities v. Billing, No. 05-1157 (PDF).

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