Silver v. New York Stock Exchange

Harold Silver (plaintiff) was the owner of Municipal Securities and Municipal Securities, Inc. (collectively, Municipal) (plaintiffs), firms that traded in municipal bonds and corporate over-the-counter securities, respectively. Municipal was registered with the National Association of Securities Dealers, Inc. (NASD) but not a member of the New York Stock Exchange (NYSE) (defendant). Municipal took steps to arrange for direct and private electronic lines of communication (the wires) to be established with a number of securities firms that were NYSE members. In the summer of 1958, the NYSE temporarily approved the wires. However, on February 12, 1959, without any prior notice, the NYSE formally disapproved the wires, which resulted in the NYSE-member firms informing Silver that the wires would be discontinued. The NYSE also informed Silver that Silver would no longer have access to the NYSE’s direct stock-ticker service. The NYSE refused to provide Silver with any reasons for its actions and did not give Silver any opportunities for a hearing to challenge the actions. Removal of the wires adversely impacted Municipal by depriving Municipal of an essential mechanism of instantaneously communicating with NYSE-member securities traders and by imposing a stigma. Silver and Municipal filed suit in federal district court, seeking an injunction against the NYSE on the basis that the NYSE’s actions violated the Sherman Antitrust Act (Sherman Act). The district court ruled in Silver and Municipal’s favor. The NYSE appealed, and the court of appeals reversed. Silver and Municipal then petitioned for certiorari, and the United States Supreme Court granted review.