Supreme Court To Decide Antitrust Immunity In Securities Underwriting Case

On December 7, the Supreme Court granted cert in Credit Suissee First Boston v. Billing. The case is a class action lawsuit against investment banks and institutional investors that took part in syndicates to underwrite the IPOs of technology companies in the 1990s. The purchasers of stocks complain that the sharing of information among the underwriters and the way in which they allocated shares amounted to an antitrust conspiracy. The problem with these allegations, however, was that much of this conduct was explicitly permitted by the Securities and Exchange Commission. Thus, the district court dismissed the lawsuit finding that defendants were entitled to antitrust immunity. The Second Circuit, however, reversed on the grounds that Congress had not granted such immunity. New York Times reporter Linda Greenhouse says the issue for the Court to decide is "how to treat the inherently collaborative activity of an underwriting syndicate, activity that -- while it would appear to violate the Sherman Antitrust Act -- is permitted by the regulatory agency that oversees it."

Interestingly, this was the second antitrust case that the Court agreed to hear on December 7. The other case, Leegin Creative Leather Products v. PSKS, addresses the continued viability of the per se rule against resale price maintenance. See this post for a discussion of Leegin.