September 27, 2018

A New York federal judge ruled Thursday that a group of investors may proceed with an antitrust suit accusing units of Morgan Stanley, Goldman Sachs and several other big banks of conspiring to thwart modernization of and preserve their dominance over the stock loan market.

In an exhaustive 93-page opinion, U.S. District Judge Katherine Polk Failla declined to throw out the proposed class action filed by investors who allege some of the biggest prime brokers in the stock loan business have colluded since 2009 to block upstart financial technology firms from pushing the market forward with superior electronic trading platforms.

These defendants, which include units of Bank of America, Credit Suisse, Goldman Sachs, J.P. Morgan, Morgan Stanley and UBS, sought earlier this year to torpedo the suit on a variety of grounds, arguing that the investors’ case advanced an implausible conspiracy theory, was built around too speculative of an injury to provide standing and suffered from a variety of other purported defects.

 But Judge Failla found Thursday that these arguments for dismissal all came up short, concluding that the investors do have antitrust standing and have otherwise adequately alleged their case for the time being.

“While it remains to be seen whether plaintiffs’ factual allegations will be borne out in discovery, the court is not permitted to dismiss them at this early stage of the litigation,” Judge Failla wrote.

. . .

The investors are represented by Michael B. Eisenkraft, Christopher J. Bateman, Kit A. Pierson, Julie G. Reiser, Richard A. Koffman and Robert W. Cobbs of Cohen Milstein Sellers & Toll PLLC, Daniel L. Brockett, Sascha N. Rand, Steig D. Olson, Maaren A. Shah, Justin Reinheimer, Thomas J. Lepri, Thomas Popejoy and Jeremy D. Andersen of Quinn Emanuel Urquhart & Sullivan PLLC and Peter Safirstein of Safirstein Metcalf LLP.

The complete article can be accessed here.