Gordon v. New York Stock Exchange, Inc.

PETITIONER: Richard A. Gordon, members of the Independent Investor Protection League
RESPONDENT: New York Stock Exchange, Inc., et al.
LOCATION: New York Stock Exchange

DOCKET NO.: 74-304
DECIDED BY: Burger Court (1972-1975)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 422 US 659 (1975)
ARGUED: Mar 25, 1975 / Mar 26, 1975
DECIDED: Jun 26, 1975
GRANTED: Nov 18, 1974

ADVOCATES:
Howard E. Shapiro - for the United States, as amicus curiae, by special leave of Court
I. Walton Bader - for petitioners
Lawrence E. Nerheim - for the Securities and Exchange Commission, as amicus curiae, by special leave of Court
William Eldred Jackson - for respondents

Facts of the case

The Securities and Exchange Commission (SEC) set fixed commission rates for stock transactions less than $500,000. Richard A. Gordon, on behalf of a class of independent investors, sued the New York Stock Exchange and member firms claiming fixed commission rates and exorbitant membership fees violated the Sherman Antitrust Act. The district court granted summary judgment to the New York Stock Exchange, holding that the authority of the SEC provided immunity from antitrust claims. The United States Court of Appeals for the Second Circuit Affirmed.

Question

Does the use of fixed commission rates violate the Sherman Antitrust Act?

Media for Gordon v. New York Stock Exchange, Inc.

Audio Transcription for Oral Argument - March 25, 1975 in Gordon v. New York Stock Exchange, Inc.
Audio Transcription for Oral Argument - March 26, 1975 in Gordon v. New York Stock Exchange, Inc.

Audio Transcription for Opinion Announcement - June 26, 1975 in Gordon v. New York Stock Exchange, Inc.

Harry A. Blackmun:

The next case, Mr. Chief Justice if I may, will be No. 74-304, Gordon against the New York Stock Exchange because it is somewhat related to the earlier one.

This case comes to us on certiorari from the United States Court of Appeals for the Second Circuit.

It presents the not uncommon problem of reconciling the federal antitrust laws with a federal regulatory scheme this time in the particular context of the national securities exchanges and their members and their use of fixed rates of commission.

The petitioner individually and on behalf of an asserted class of small investors sued the New York Stock Exchange, the American Stock Exchange and two member firms and claimed that the system of fixed commission rates utilized by the exchanges for transactions of less than half million dollars violated Sections 1 and 2 of the Sherman Act.

The District Court and the Court of Appeals both concluded that the fixed commission rates were immunized from antitrust attack because of the specific authority of the SEC under Section 19 (b) (9) of the Securities Exchange Act of 1934 to disapprove or approve commission rates and the SEC's exercise of that power.

This power so exercised the courts concluded, placed the rates beyond the reach of the antitrust laws.

In a long opinion filed today, we affirm that judgment.

In it, we endeavor to outline in detail the pervasive supervision both by way of power and by way of active regulation of the SEC over rates particularly in the last 15 years.

We conclude that the interposition of the antitrust laws on the theory that they bar fixed commission rates as per se violations of the Sherman Act would unduly interfere with the intended operation of the Securities Exchange Act.

This case in other words, we hold is the different case referred to in a case decided here a decade ago called Silver against the New York Stock Exchange.

I'm authorized to say that Mr. Justice Douglas has filed a concurring opinion although joining the opinion of the Court.

And that Mr. Justice Stewart also has filed a concurring opinion in which Mr. Justice Brennan has joined.