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LISA NAPOLI: Today the '90s tech bubble is the subject of conversation at the Supreme Court. The Supremes will look at whether major investment banks conspired to inflate IPO prices back then. Marketplace's Amy Scott has details.
AMY SCOTT: The case is essentially a turf war.
Investors say Credit Suisse, Morgan Stanley and others broke anti-trust laws by colluding to pump up IPO prices.
But a district court dismissed the case. The judge ruled that investment banks have an implied immunity to anti-trust laws because they're regulated by their own set of securities laws.
A federal appeals court disagreed.
Steve Thel, with Fordham University law school, explains why it's now with the Supreme Court.
STEVE THEL: If the state regulates the rates for electricity, it's reasonable not to also regulate the rates of electricity under anti-trust laws. So our question is, does that federal law of securities preempt the application of the federal anti-trust laws?
Investment bankers hope so. Anti-trust laws allow plaintiffs to sue for triple the money they lost.
Some worry the potential for expensive lawsuits could dissuade underwriters and threaten the capital-raising process — just when Wall Street appears to be losing its edge to overseas rivals.
Bruce Foerster has worked for several New York investment banks. He says the Supreme Court should tread carefully.
BRUCE FOERSTER: Look at our economy. It's the envy of the world. Trifling with how we raise money, to me, is a very, very serious undertaking.
The Securities and Exchange Commission has weighed in. Officials say anti-trust challenges could interfere with their jurisdiction.
Mel Weiss is one of the attorneys representing investors in the case. He says the trouble is, the SEC doesn't provide them much recourse.
MEL WEISS: The only remedy that you can get would be under the federal securities laws. And under the federal securities laws, there is no remedy for the kinds of injuries that we're talking about.
Not that he hasn't tried. Weiss represented investors in a parallel case. It accused IPO issuers and underwriters of breaking securities laws by manipulating public offerings. That case hit a serious snag a few months ago when a judge dissolved its class-action status.
In New York, I'm Amy Scott for Marketplace.