Following his approval earlier this week of a $1.4 billion settlement for ten financial services firms accused of providing investors with misleading stock research, US District Judge William Pauley has dismissed two class action suits against the Wall Street investment banks.
The plaintiffs alleged that the ten banks violated US antitrust laws whilst underwriting IPOs in the late 1990s by forcing investors in 'hot' initial public offerings to pay kickbacks and purchase more shares following the stocks' debut in order to artifically inflate the share prices.
However, in a 67 page ruling, Judge Pauley found that the conduct was implied to be immune from antitrust scrutiny, because the Securities and Exchange Commission has exclusive jurisdiction in the area of securities underwriting.
"Any other result would force the defendants to navigate the Scylla of securities regulation and Charybdis of antitrust law," he explained.
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