Silver v. New York Stock Exchange

PETITIONER: Silver
RESPONDENT: New York Stock Exchange
LOCATION: Spokane Filling Station

DOCKET NO.: 150
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 373 US 341 (1963)
ARGUED: Feb 25, 1963 / Feb 26, 1963
DECIDED: May 20, 1963

Facts of the case

Question

Media for Silver v. New York Stock Exchange

Audio Transcription for Oral Argument - February 26, 1963 in Silver v. New York Stock Exchange

Audio Transcription for Oral Argument - February 25, 1963 in Silver v. New York Stock Exchange

Earl Warren:

Number 150, Harold J. Silver et al., Petitioners, versus New York Stock Exchange.

We'll wait just a moment.

Mr. Shapiro.

David I. Shapiro:

May it please the Court.

The basic legal issue of this case is whether the New York Stock Exchange is immune from the antitrust laws when it requires its members to boycott a non-member.

Now what are the facts of this case?

Petitioner, Municipal Securities Company, which I assume refer to in argument as MSC was a sole proprietorship owned by Harold J. Silver and was engaged in the municipal bond business in Dallas, Texas.

Municipal Securities Company Incorporated, which I shall refer to as MSC Inc., was formed by Mr. Silver in 1958 and was engaged principally in the over-the-counter corporate securities business.

Now both MSC and MSC Inc. were licensed as securities dealers under the laws of Texas, were registered broker-dealers with the Securities and Exchange Commission, and were members in good standing of the National Association of Securities Dealers.

Neither MSC nor MSC Inc. was a member of the New York Stock Exchange.

In 1956, in an order to more effectively trade back and forth with other dealers who traded in municipal bonds, MSC, that's the proprietorship, installed private telephone wires from its office to the offices of various Dallas banks and to the Municipal Bond Departments of two and later three firms who are members of the New York Stock Exchange.

After the formation of MSC Inc. in 1958, private wires were installed from the Trading Department of the corporation to the Dallas Trading Departments of nine firms who are members of the New York Stock Exchange.

MSC Inc. requested the Stock Exchange to approve these installations and also requested that the Exchange furnish it stock ticker or what is otherwise known as continuous quotations service.

Temporary approval was obtained and both the private wires and stock ticker service were installed during the summer of 1958.

In the meantime, the Exchange was carrying on a background investigation of MSC Inc. officers.

Then on February 12, 1959, without notice, either the MSC or MSC Inc., Exchange directed as member firms to discontinue all of their private wire connections to both MSC and MSC Inc.

John M. Harlan II:

Could I ask you a question?

David I. Shapiro:

Yes, sir.

John M. Harlan II:

Maybe I'm wrong.

I thought that the Stock Exchange rules required the applications for wire services of this kind, with respect to the nonmember to be made by the member?

David I. Shapiro:

I believe that they do, Your Honor but --

John M. Harlan II:

And you say that this application was made by your client?

David I. Shapiro:

That's correct.

There is a form in which it appears that both the member and the non-member make application for approval.

The rules, I think, speak of member approval for the establishment of such wires but the form itself apparently is directed to nonmembers.

And such a form was made -- form application was made in this case.

Now --

Potter Stewart:

No application at all was made with respect to the --

David I. Shapiro:

Propriety sir.

Potter Stewart:

With propriety (Voice Overlap) --