By a 7-1 vote in Credit Suisse Securities v. Billing, the Court gave the banks broad implied immunity from antitrust lawsuits, ruling that antitrust laws do not apply to the syndication and marketing techniques used in initial public offerings. The Court justified its conclusion in part on the grounds that the Securities and Exchange Commission is better qualified than judges and juries in antitrust cases to determine the legality of conduct in the complex field of initial offerings.
The class action was brought by investors who claimed that more than a dozen investment banks and underwriters manipulated the market for IPOs in the dot-com boom period from 1997 to 2000. The claim was that the underwriters banded together to impose requirements on IPO buyers such as "tying" -- in which buyers must buy less desirable offerings along with more popular ones -- and requiring higher commissions to be paid on later offerings. The plaintiffs claimed that these sales techniques artificially increased stock prices and violated antitrust laws.
Aside from the legal theory interest in the case, it was a significant win for the investment banks, since antitrust law provides for treble damages, which are not available under the securities laws.
The firms involved in the case included Credit Suisse; Bear, Stearns; Citigroup; Comerica Inc.; Deutsche Bank Securities Inc.; Fidelity Distributors Corp.; Fidelity Brokerage Services LLC; Fidelity Investments Institutional Services Co. Inc.; Goldman, Sachs & Co.; The Goldman Sachs Group Inc.; Janus Capital Management LLC; Lehman Brothers Inc.; Merrill Lynch, Pierce, Fenner & Smith Inc.; Morgan Stanley & Co. Inc.; Robertson Stephens Inc.; Van Wagoner Capital Management Inc.; and Van Wagoner Funds Inc. Over 900 issues were alleged to have been manipulated.
