LAWFUEL – The Business & Law Newswire – Bloombergs report that the U.S. Supreme Court gave Goldman Sachs Group Inc. and other investment banks a new shield from antitrust claims, throwing out lawsuits that accused the securities industry of rigging 900 initial public offerings.
The justices, voting 7-1, today overturned a federal appeals court ruling that had permitted suits against 16 investment banks and institutional investors, a group that also included Credit Suisse Group and Merrill Lynch & Co. The investors were seeking billions of dollars in damages.
The suits had threatened to roil the IPO business. Wall Street’s revenue from stock underwriting has climbed an average 13 percent a year since 1995, reaching a record $19 billion in 2006, and is on pace to surpass that figure this year, based on estimates by Bank of America analyst Michael Hecht. Goldman Sachs had the most revenue from the business, $1.47 billion, according to Hecht, followed by Citigroup Inc., UBS AG, Morgan Stanley and Merrill Lynch.
The antitrust suits “would have opened up a real hornet’s nest,” said James Cox, a professor of corporate and securities law at Duke University in Durham, North Carolina. “The practices that were being challenged were a variety of practices that the underwriters customarily follow.”
The high court said an antitrust shield was warranted because the Securities and Exchange Commission regulates IPOs and lays out detailed rules governing what steps underwriters can and can’t take. Writing for the court, Justice Stephen Breyer said antitrust suits created “a substantial risk of injury to the securities markets.”