Credit Suisse Securities LLC v. Billing

Summary

        U.S. Supreme Court

        Investors filed suit against investment banks that formed syndicates to execute initial public offerings for technology-related companies. The banks, acting as underwriters, allegedly pressured buyers into unlawful "laddering" and "tying" agreements in violation of antitrust laws. The District Court dismissed the complaints, finding federal securities law impliedly precluded application of antitrust laws to the alleged conduct. The Second Circuit reversed.

        Reversed. The court considers four factors to determine whether securities law and the antitrust complaint are "clearly incompatible" to warrant an implied preclusion of the antitrust laws' application. The banks here clearly met three of the four factors meriting implied preclusion. The investors' complaint was based on the underwriters' promotion and sale of newly issued securities. This conduct was central to the functioning of well-regulated capital markets and under the supervision of the Securities Exchange Commission (SEC). The critical risk here was whether application of both securities and antitrust laws would produce conflicting duties. To permit an antitrust action for the manner in which underwriters collected excessive commissions would threaten serious securities-related harm. There was a substantial risk of contradiction and inconsistency that would punish joint conduct challenged by investors but permitted by securities law. Because the SEC already regulated such conduct, any enforcement-related need for the lawsuit was small.

—