Court’s Decision
I. Basis of the court decision
In 1971, Gordon individually filed a suit against the New York Stock Exchange (NYSE) and several other member firms of the Exchanges, arguing that the fixed commission rate NYSE and other exchanges adopted violated federal antitrust laws*.
The District Court stated that the fixed rate commissions were immunized from antitrust laws because it’s under the authority of the Securities and Exchange Commission (SEC). The Second Circuit Court of Appeals upheld. Gordon then appealed to the Supreme Court.
The Supreme Court ruled that the fixed commission rates were not subject to antitrust laws because of the SEC's power to regulate the financial markets. The Court affirmed that the implied exemption of the antitrust laws was necessary with respect to the fixed commission rates, avoiding the possibility of the conflict between the instruction from SEC to exchange and the antitrust law. The court decided that the repeal of the antitrust laws pertaining to the areas covered by the Securities Exchange and enforced by the SEC are necessary for the SEC to adequately enforce the laws.
II. How the decision will play a precedent for other cases.
In Gordon v. New York Stock Exchange, the Court further illustrated clearly the
* Gordon v. New York Stock Exchange, inc., 422 U.S. 659 (1975). Read from http://www.law.cornell.edu/supremecourt/text/422/659 repugnancy standard when determining whether antitrust laws are implicitly repealed in specific aspects of the financial industry*. The Gordon Supreme Court expanded the set of circumstances of implied immunity from antitrust laws.
The Court evaluated the decision on four factors (Rebarber, 2011):
1. Does SEC own generalized authority on the regulatory ...
... middle of paper ...
...ornfeld, 2014).
Given the complex nature of the financial markets they should be regulated primarily by the SEC. Additionally since there is specific legislation enacted to regulate these markets, and then the SEC’s oversight should be the standard to which the stakeholders are held.
Reference
Gordon v. New York Stock Exchange, inc., 422 U.S. 659 (1975). Read from http://www.law.cornell.edu/supremecourt/text/422/659
Jessica A. Rebarber, (2011), Credit Suisse v. Billing: The Limited Impact on Application of Antitrust Laws in Federally Regulated Industries Following the 2008 Financial Crisis and Beyond, 6 J. Bus. & Tech. L. 417, Retrieved from: http://digitalcommons.law.umaryland.edu/jbtl/vol6/iss2/7
Mark A. Kornfeld, (2014), Tracking New Developments in Securities Litigation, Aspatore, WL 1245076. Retrieved from: https://1-next-westlaw-com.proxy1.library.jhu.edu/
This case is based on Mrs. Jennifer Sharkey, who sued J.P. Morgan & Co. (JCMC), Mr. Kenny, Mr. Green, and Mrs. Lassiter, alleging breach of contract and violations of the SOX anti-retaliation statute. The facts started when Mrs. Sharkey was assigned to a Suspect Client 's account where members of JPMC expressed to her their concern regarding to this account because they suspected that the Suspect Client was involved in illegal activities. After Mrs. Sharkey’s investigation, she claimed that she informed her conclusions to superiors Mr. Kenny, Mr. Green, and Mrs. Lassiter, of the Suspect Client 's potential unlawful activities, such as: money laundering, mail fraud, bank engaged in fraud, and violations of federal securities laws. After
“Processor Editorial Article - Antitrust Laws: Not Just For The Big Boys.” Editorial.Processor 19 Nov. 2004: 27+. Processor.com. Web. 29 Nov. 2011 .
After the time of financial crisis, JP Morgan was not the only national bank in US which got involved in trade of toxic loans related to mortgage. Before JP Morgan, it was Goldman Sachs-another large US Bank that faced the allegation of manipulating the trades in its own self interes, ended up in favor of SEC while GoldMan Sachs were asked to pay $500 Million during late 2011 in a deal called Abascus 2007-AC1 where the bank were alleged to mislead its investors on a deal related to Collateral Debt Obligation(CDO). (Eaglesham, 2011) The ab...
"Schenck v. United States. Baer v. Same.." LII. Cornell University Law school, n.d. Web. 6 Jan. 2014. .
Apart from Antitrust laws, there are several other laws that promote fair business practices. The Robinson-Patman Act prohibits price discrimination. This act ...
The outsourced administrative support company accused CFPB of the alleged accountability absence that violated the US Constitution. The Congress “interfered” with the consumer finance protection regulation that stirred additional legal charges against the CFPB. However, the specialty of CFPB as the only existing remedy against the financial crisis made it possible for the company to overrule the congressional interference and retain “accountability deficits” (Block-Lieb, 2012, p. 28). The present position shows the dubiousness of the CFPB that goes against the governmental regulations while secures the ability of the population to loan and be
To understand why the standard applied in Katz6 is the most suitable for answering the questions of this motion, its alternatives must be considered. Beside Katz, Olmstead v. United States7 and Kyllo v. United States8 stand as pivotal cases that dealt with the...
The anti-trust laws were set in place to promote vigorous competition but also to protect the consumer from unfair mergers and business practices. The first antitrust law that was passed by Congress is called the Sherman Act and is a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade” according to www.FTC.gov . Later in 1914 Congress passed two more laws, one creating the Federal Trade Commission Act (FTCA) and then the Clayton Act, which now create the three core federal antitrust laws that are still active currently. Although they have changed over the last hundred years, they still have the same concept: “to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up” as stated by the FTC.gov website on The Antitrust Laws.
The Volcker Rule, named after the former chairman of the United States Federal Reserve Paul Volcker, was first publicly discussed in January 2010. President Obama had proposed the Volcker Rule as an additional ruling to the Dodd-Frank Wall Street Reform and Consumer Protection Act, a bill that was at the time already under consideration by Congress. The Dodd-Frank Wall Street Reform and Consumer Protection Act, also known as the Dodd-Frank Act, was projected to help further promote and regulate financial stability of the United States’ economy, especially during the Great Recession, which officially lasted from 2008 to 2010. The general purpose of this Act is to regulate the financial regulatory system by avoiding any excessive or unnecessary risk-taking by large, influential banks, which is one of the significant causations that initially triggered the financial crisis. One crucial piece of this Act is the Volcker Rule, as it seeks to financial regulators to reform the ways banks can invest and regulate trading in the markets. The Volcker Rule is intended to greatly reduce risks within the banking industry by setting a restriction to trading. It limits the way banks invest their money within “speculating” markets, in which are not related to or benefit their customers. The more specific banking entities the Volcker Rule emphasizes on prohibiting any investments, ownership, or sponsorship of hedge funds, private equity funds, as well as, any “proprietary” trading. Additionally, it generally prevents financial institutions from using any of the bank’s money, which is insured by the FDIC, to manage any private equity funds and hedge funds.
The Dodd-Frank Wall Street Reform and Consumer Protection Act’s policies haven’t really been implemented to the extent that regulators would have liked. Although the legislation takes many steps in addressing systematic risks in the United States financial system and improving coordination among regulators, some critics believe that alternative options might have been more effective. The coming years will give us a better understanding of how well the Dodd-Frank Act addressed these concerns.
The United States v. Thomas J.L. Smiley et al.. (n.d) retrieved 1 February 2012, from Google Books Web Site:
5. Wabash Case - 1886 Supreme Court ruled that said individual states had NO power to regulate interstate commerce. This would be done by the federal gov’t
The Sherman Antitrust Act of 1890 was an early attempt to try to control abuses by large combinations of businesses called trusts. The Act was weakened by the Supreme Court used against labor unions rather than against monopolies. Roosevelt’s first push for reform on the national level began with a secret antitrust investigation of the J. P. Morgan’s Northern Securities Company whom monopolized railroad traffic. After successfully using his powers in government to control businesses, Roosevelt used the Sherman Antitrust Act against forty-three “bad” trusts that broke the law and left the “good” trusts alone.
The Clayton Antitrust Act was introduced in 1914 to clarify the principles the Sherman Antitrust Act set out to do. While the Sherman Antitrust Act said that monopolies were illegal, the Clayton Antitrust Act “defined as illegal certain business practices that are conducive to the formation of monopolies or that result from them. For example, specific forms of holding companies and interlocking directorates were forbidden.” (Britanica) This legislation was influential and was used to dissolve many monopolies in years to come.
The dissolution of Standard Oil marked an important turning point in history for its adding of regulation against monopolies. The Sherman Anti-Trust Act, which brought an end to this excessive restraint by the company, allowed the Federal government to hold cases against trusts such as the one Standard Oil had. This turning point was the beginning of regulation against restraint or monopolies by other businesses.