Supreme Court Hears Credit Suisse Anti-Trust Case

by Glen Shapiro, Lawandtax-News.com, New York

03 April 2007

The US Supreme Court last week heard oral arguments in the widely watched Credit Suisse First Boston Ltd v Billing case, and several Justices expressed doubts over whether it would be right to limit the existing immunities investment banks have under anti-trust laws.

In a class action, investors sought damages from a group of securities firms and institutional investors, alleging that they had conspired to artificially increase share prices in almost 900 IPOs in the 1990s. Specifically, the defendants were accused of using 'tie-ins' and 'laddering' (requiring investors to buy in the aftermarket at pre-agreed, higher prices), contrary to the Sherman Act.

The district court dismissed the action on the grounds that the SEC expressly permits some of the challenged conduct, and that over-riding the banks' immunity 'would conflict with an overall regulatory scheme that empowers the Commission to allow conduct that the antitrust laws would prohibit.'

The Appeal Court vacated the opinion of the district court because no specific conflict existed between anti-trust and securities laws, and because the latter don't explicitly give immunity to the banks. The Court noted that Congress had not granted immunity either expressly or by implication.

Although the SEC and the Department of Justice filed an amicus curiae brief supporting the banks' request to the Supreme Court for a writ of certiorari, they hold opposing views on the underlying issue, with the SEC strongly advocating immunity from such anti-trust actions and the DoJ opposing it.

Supreme Court Justice Anthony Kennedy recused himself from last week's hearing, apparently because his son Gregory is a managing director of Credit Suisse.

During the hearing, Chief Justice John Roberts and some other justices seemed to suggest that the complexity of securities laws made an anti-trust trial unsuitable as a forum for establishing ongoing principles, perhaps suggesting that they will bat the ball back to Congress by issuing the requested writ.

The Court's decision is expected sometime later this year.

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