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Morgan Stanley Wins Dismissal in Antitrust Class Action Suit Involving “Odd-Lot” Bonds

Paul, Weiss, as part of a joint defense group, secured the dismissal of a putative antitrust class action complaint against our client Morgan Stanley and nine other financial institutions. In a 62-page opinion granting the defense group’s motion to dismiss with prejudice in its entirety, U.S. District Judge Lewis J. Liman decisively rejected the plaintiffs’ boycott conspiracy arguments.

The suit, filed in 2020 in the Southern District of New York, arose out of a pricing disparity between corporate bonds trading in odd lots, or groups of bonds that are worth less than $1 million, and bonds traded in higher volume and value, known as round lots. The plaintiffs, traders of odd-lot bonds, alleged that the defendants were engaged in a conspiracy to increase prices on odd-lot trades by boycotting, as a group, certain odd-lot e-trading platforms. Although the plaintiffs had originally alleged price-fixing claims, they dropped those claims after amending their complaint.

In his opinion, Judge Liman accepted the defense group’s arguments that the plaintiffs had failed to plead a group boycott conspiracy. Characterizing the complaint as “ambiguous and unclear,” Judge Liman held that it ultimately failed to state a plausible claim for relief. The court found that the conduct alleged was consistent with independent competitive decision making by each bank, rather than a conspiracy to boycott, and that the alleged price differential between odd-lot and round-lot bond trades was what one would expect in a competitive environment.

The Paul, Weiss team included litigation partners Richard Rosen, Susanna Buergel and Jane O’Brien

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