Second Circuit – Antitrust conspiracy: In re Treasury Securities Auction Antitrust Litigation

United States Court of Appeals for the Second Circuit

Antitrust conspiracy

Inference of legitimate business interests – Plausible conspiracy

In re Treasury Securities Auction Antitrust Litigation

22-943

Judges Jacobs, Wesley, and Robinson

Background: Eighteen pension and retirement funds alleged two conspiracies against 10 large banks who are among the two primary dealers that participate in the multi-trillion-dollar market for United States Treasury securities. The plaintiffs alleged that certain dealers violated the Sherman Act by rigging Treasury auctions by sharing sensitive, proprietary information and placing collusive bids and by boycotting the emergence of direct trading between buy-side investors, so-called all-to-all trading on the secondary market for Treasuries, including threatening and intimidating trading platforms that sought to offer such trading. The plaintiffs appealed from the dismissal of their complaint.

Ruling: The Second Circuit held that the allegations do not plausibly show a conspiracy with respect to the auctions or alleged secondary-market boycotts. The plaintiffs failed to demonstrate that the dealers formed an anticompetitive agreement which is a requirement for the antitrust claims. The plaintiff’s allegations of wrongful information-sharing largely amount to inconsequential market chatter and the statistical analysis is not focused specifically on the dealer-defendants and relies on averages spread over an excessively long span of time. Furthermore, the plaintiffs failed to weave scattered, unrelated episodes involving different dealers over the course of roughly two decades into an actionable conspiratorial narrative.

 Michael B. Eisenkraft, of Cohen Milstein Sellers & Toll, for the plaintiffs-appellants; Richard C. Pepperman II, Matthew A. Schwarts and Kathleen S. McArthur, of Sullivan & Cromwell, Jon R. Roellke, of Morgan, Lewis & Bockius, Richard A. Rosen, Brad S. Karp, Kenneth A. Gallo, Susanna M. Buergel, and Melina M. Meneguin Layerenza, of Paul, Weiss Rifkind, Wharton & Garrison, Robert D. Dick, of Covington & Burling, Adam S. Hakki, Agnes Dunogue, and Benjamin Klebanoff, of Shearman & Sterling, Jay B. Kasner and Karen M. Lent, of Skadden, Arps, Slate, Meagher & Flom, John E. Schmidtlein, of Williams & Connolly, Paul S. Mishkin of Davis Polk & Wardwell, Eric J. Stock and Gabrielle Levin, of Gibson, Dunn & Crutcher, and David G. Januszeski, Elai Katz, Thorn Rosenthal and Herbert S. Washer, of Cahill Gordon & Reindel, for the defendants-appellees.

Oral argument audio