Brief Fact Summary. Gordon (Plaintiff)Â alleged that the Sherman Act antitrust laws were violated by the New York Stock Exchange (NYSE) (Defendant)by the utilization ofstatic rates of commission on securities sales as detailed by the Securities Exchange Act of 1934 Â§ 19.
Synopsis of Rule of Law. Â§ 19 of the Securities Exchange Act of 1934 allowing for fixed rates of commission for securities sales is invulnerable to federal antitrust laws.
Issue. Are static rates of commission for securities sales protected from federal antitrust laws under Â§ 19 of the Securities Exchange Act of 1934?
Held. (Blackmun, J.) Yes. Static rates of commission for securities sales are protected from federal antitrust laws under Â§ 19 of the Securities Exchange Act of 1934.Â Prior to the Act’s adoption, exchanges were self-regulating and existed without much supervision. Upon its enactment, although the concern of fixing rates of commission for securities sales was not disregarded, the Commission was permitted to propose â€œreasonableâ€ rates. The Commission sometimes asked that the exchange raise the rates and other times to reduce them, however, for specific transactions competitive rates were always permitted. As in other areas, here, antitrust laws and the Act seem to clash. In Silver v. New York Stock Exchange, 373 U.S. 341 (1963) the Court considered the relationship between the antitrust laws and the Act, however in that case, the Commission failed to use direct regulatory power and so no conflict was apparent. In this case, because Â§ 19 of the Act utilizes that type power, a very different case exists. As in Silver, to allow the Act to work, an implicit repeal of antitrust laws is needed. In this case, the implicitrepeal is necessary to inhibit the antitrust statutes from hindering the Act. Â§ 19 of the Act allowing for static rates of commission for sales of securities is protected from federal antitrust laws. Failing to imply repeal would nullify the legislative stipulation for supervisory agency administration of exchange commission rate. Affirmed.
Given the principle that exchange self-regulation is to be regarded as justified in response to antitrust charges only to the extent necessary to protect the achievement of the aims of the Securities Exchange Act, it is clear that no justification can be offered for self-regulation conducted without provision for some method of telling a protesting nonmember why a rule is being invoked so as to harm him and allowing him to reply in explanation of his position.View Full Point of Law