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The Great Credit Suisse-Wall Street Conspiracy Case

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We’re sure that Credit Suisse is not exactly overjoyed that the case alleging an "epic Wall Street conspiracy” has become widely associated with its name. But other Wall Street securities firms probably breathed a collective sigh of relief yesterday as reports filtered out from the Supreme Court arguments on Credit Suisse v. Billing, the case in which plaintiffs seek to strip an immunity from antitrust prosecution long enjoyed by investment banks, indicating the Supreme Court seemed skeptical about applying antitrust law to a case involving initial public offerings.
The case begins where so much of our current trouble started—in the go-go days of the Tech IPO. Class actions lawyers claim to represent purchasers in initial public offerings in the 1990s and charge that investment banks conspired with a institutional investors to manipulate prices. The SEC and much of the securities industry claim that applying antitrust laws to the IPO process would seriously disrupt the SEC regulatory of the securities offering process, increase the cost of capital and further damage the ability of US capital markets to compete in a globalized market.
The class action lawyers say, yeah, yeah. And, also, fuck you. Pay me.
We’ve got no official opinion on questions of law of this sort. We’ve never even tried to read the briefs, much less the argument before the court. But, as a policy matter, it does strike us as a bad idea to introduce antitrust litigation into the IPO process. Civil and criminal trials aren’t really turning out to be a great way to regulate many other practices in the financial industry, and there’s even less reason to think it will work in the IPO process. Unless, you know, you are really, really tired of companies going public. Then it’s probably great.
The Supreme Court, surprisingly enough, seems inclined to agree with us.
Justices Wary of Antitrust Law for IPOs [Houston Chronicle]