United States v. National Association of Securities Dealers

422 U.S. 694 (1975)

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United States v. National Association of Securities Dealers

United States Supreme Court
422 U.S. 694 (1975)

Facts

The United States (plaintiff) sued the National Association of Securities Dealers and certain mutual funds, mutual-fund underwriters, and broker-dealers (collectively, NASD) (defendants), alleging they violated federal antitrust law by engaging in resale price maintenance and refusals to deal in connection with secondary-market sales of mutual-fund shares between dealers. The NASD responded that the challenged practices were immune from antitrust liability due to § 22(d) of the Investment Company Act of 1940, which prohibits price competition in dealer sales of mutual-fund shares, and § 22(f) of the act, which authorizes mutual funds and the Securities and Exchange Commission (SEC) to combat abuses in the mutual-fund market. However, the United States argued that § 22(d) did not apply to the challenged interdealer transactions in which a broker-dealer acted as a broker rather than as a dealer, or to transactions in which a broker-dealer acted as an agent for an investor or traded for its own account. The NASD retorted that § 22(d) does apply in such instances. The district court agreed with the NASD, ruling that it enjoyed antitrust immunity and dismissed the case. The United States appealed directly to the Supreme Court.

Rule of Law

Issue

Holding and Reasoning (Powell, J.)

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