The 1934 Securities Exchange Act which recognizes the broad,
self-regulatory powers of national securities exchanges,
including the aforementioned traditional rule-making powers,
contains no express exemption of exchange rules from the
application of antitrust laws. Silver, supra, 373 U.S. at 357,
83 S.Ct. 1246. This is particularly significant in light of other
comparable statutes which do contain express exempt provisions.
U.S. v. Philadelphia National Bank, 374 U.S. 321, footnote 27 at
350, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1962). Thus, the defendants'
claim that its rules regarding minimum commissions are immune
from antitrust attack must be based on the Act's implied repeal
of the antitrust laws. The Supreme Court in Silver recognized
that the Securities Exchange Act did impliedly repeal antitrust
law to a certain extent, though it recognized the longstanding
rule that repeals by implication were not favored. Silver,
supra, 373 U.S. at 357, 83 S.Ct. 1246. The Court in Silver
found that ". . . repeal is to be regarded as implied only if
necessary to make the Securities Exchange Act work, and even then
only to the minimum extent necessary." Silver, supra, 373 U.S.
at 357, 83 S.Ct. at 1257. Thus, the Court in Silver recognized
that ". . . particular instances of exchange self-regulation . .
. may be regarded as justified in answer to the assertion of an
antitrust claim." Silver, supra, 373 U.S. at 361, 83 S.Ct. at
1259. The plaintiffs' complaint essentially states that the acts
of self-regulation in the present case, i.e., the fixing of
minimum commission rates, do not justify a repeal of the
antitrust laws. Defendants' motion to dismiss does not, however,
go to the question of whether the defendant exchanges'
self-regulatory acts were justified; rather, it asks this Court
to decide who should properly decide whether or not the acts were
justified. Defendants' alternative motion to stay proceedings
also addresses itself to this question of who should decide, as
well as to the manner in which the question of justification
should be decided.
Since the statutory scheme setting up exchange self-regulation
was not sufficiently pervasive to create a total exemption from
the antitrust laws, the Court in Silver recognized that ". . .
some form of review of exchange self-policing . . . is therefore
not at all incompatible with the fulfillment of the aims of the
Securities Exchange Act." 373 U.S. at 359, 83 S.Ct. at 1258. The
Court stated that such review could be by either administrative
agency or by the courts. In Silver, since the defendants'
actions which plaintiffs claimed violated antitrust laws were not
subject to the SEC's jurisdiction, the Court held that the
plaintiffs' claim was recognizable in an antitrust court. Yet the
Court said: "Should review of exchange self-regulation be
provided through a vehicle other than the antitrust laws, a
different case as to antitrust exemption would be presented."
Silver, supra, 373 U.S. at 360, 83 S.Ct. at 1258. Because the
SEC allegedly has the power to review minimum commission rates
under 15 U.S.C. § 78s(b)(9) and their antitrust effects, the
defendants argue that there is no jurisdiction in the antitrust
court to review the rates for alleged antitrust violations.
It seems clear that the SEC has the power to review minimum
commission rates under 15 U.S.C. § 78s(b)(9). Gordon v. New York
Stock Exchange, Inc., 366 F. Supp. 1261 (S.D.N.Y. 1973), affirmed
498 F.2d 1303 (2nd Cir. 1974); Kaplan v. Lehman Brothers,
250 F. Supp. 562 (N.D.Ill. 1966), affirmed 371 F.2d 411 (7th Cir.
1967). It also seems clear that the SEC has the power to consider
antitrust matters when reviewing exchange self-regulatory rules
and policies, including those relating to minimum commission
rates. Thill Securities Corp. v. New York Stock Exchange,
433 F.2d 264, at 271 (7th Cir. 1970); The Rules of the New York Stock
Exchange, 10 SEC 270 (1941); Eisen v. Carlisle and Jacquelin, 54
F.R.D. 565, at 572 (S.D.N.Y. 1972). The provision that national
securities exchange rules must be "just and adequate to insure
fair dealing," 15 U.S.C. § 78f(d) seems quite similar to
provisions limiting rules to those which serve the "public
interest," Gulf States Utilities Co. v. F.P.C., 411 U.S. 747, at
757-758, 93 S.Ct. 1870, 36 L.Ed.2d 635 (1972) or those which are
not "detrimental to the commerce of the United States . . . or is
unjustly discriminating or unfair," Latin America/Pacific Coast
Steamship Conference v. Federal Maritime Commission, 150
U.S.App.D.C. 362, 465 F.2d 542 at 554 and 558 (1972), cert. den.
409 U.S. 967, 93 S.Ct. 269, 34 L. Ed.2d 234. Finally, it seems
clear that the SEC considered antitrust matters in this case when
it at least allowed the defendant exchanges' minimum commission
rates to function over the past 4-6 years. See the affidavits of
Calvin, Crawford, Weithers and Rotberg.
In light of the foregoing, the central issue in the case at
hand becomes this: Does SEC supervision, or at least the
potential for SEC supervision, of minimum commission rates —
including the consideration of relevant antitrust matters — mean
that antitrust courts have absolutely no jurisdiction to
entertain suits concerning these rates under the antitrust acts?
In answering this question, I am aware of this Court's possible
jurisdiction over the minimum rate structure under the
Administrative Procedure Act and under 15 U.S.C. § 78y, Gordon,
supra, 498 F.2d 1303; Thill Securities Corp., supra, 433 F.2d
The Second Circuit Court of Appeals has held that under these
conditions, there can be no antitrust suits. The federal district
court in Gordon held:
"Without venturing to describe the full contours of
this immunity, we believe that the Exchange Act, as
construed by Silver, left the power to fix
commission rates within the exclusive jurisdiction of
the Exchange, subject to commission supervision." 366
F. Supp. at 1264.
In affirming, the Court of Appeals stated: