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Wall Street Firms Win in Supreme Court's IPO Ruling

June 19, 2007

Tyler Baker, co-chair of the Fenwick & West Antitrust and Unfair Competition Group, was recently quoted in a San Jose Mercury News story entitled, "Wall Street Firms Win in Supreme Court's IPO Ruling."

The U.S. Supreme Court ruled Monday that Wall Street firms accused of rigging hundreds of initial public offerings during the tech boom cannot be sued on antitrust grounds. This decision dramatically limits the size of potential legal settlements, considering federal antitrust law dictates that damages are automatically tripled.

Baker of Fenwick & West said the high court's ruling was a relief. "There is a real risk that people operating in that area will get contrary signals about what they're supposed to be doing."

The antitrust lawsuits claim the investment banking and institutional investing firms profited at the investing public's expense by conspiring to pump up the prices on the IPOs of eBay, Amazon.com and hundreds of other tech stocks so they would soar soon after they began trading publicly.

The question before the Supreme Court was where to draw the line between when to apply antitrust laws rather than leave it to the Securities and Exchange Commission to police its regulatory turf. In this case, the court decided such immunity was warranted because the SEC regulates IPOs, lays out detailed rules governing what steps underwriters can and can't take, and is more consistent and predictable than judges/ juries where interpreting securities law is concerned.​