Opportunity and advantage. Two of the most simultaneously hated and beloved ideals in American business ideology. Without one there would not be the other, but too much of concentrated advantage can inhibit the spreading of opportunity. Which is kind of what three big law firms are saying with their lawsuit against the New York Stock Exchange and other high-frequency trading markets, as the Wall Street Journal reports. The lawsuit “could test a cornerstone of U.S. securities law,” making an impact nationwide, as a San Antonio business litigation attorney could tell you; and it’s all about equity and justice.
And, of course, money. The state of Texas is regularly involved in business transaction—like their (unsuccessful) bid to bring Tesla into the Lone Star State in exchange for billions of dollars in tax breaks—but a San Antonio business litigation attorney like Douglas Shumway probably wouldn’t have imagined the state going to battle against the economic forces of combined Opportunity and Advantage. (Well, maybe Rick Perry would do something cowbowishly rogue on his own, as he seems to love his gubernatorial power). Not so for the City of Providence, Rhode Island and the State-Boston Retirement System, whose lawyers are alleging that “the biggest stock exchanges gave preferential treatment to certain customers, costing regular investors, such as public pension funds, billions of dollars.”
Yep, you can bet when state governments get involved, it’s about billions of dollars. But the interesting thing about the lawsuit—at least how it would affect a San Antonio business litigation attorney like Shumway, for example—is that if it has its way in the courtroom, it could strip exchanges’ immunity from lawsuits seeking damages. Contending that NYSE, the Nasdaq Stock Market, Chicago Stock Exchange and BATS Global Markets Inc. grant advantage to investors that include better pricing and essentially cutting in line, the lawsuit “could face stiff challenges in court,” according to legal experts.
Clear and specific damages need to be demonstrated—pretty difficult to prove since “allegations often involve opaque and superfast shifts in market prices,” and Shumway, who also practices securities litigation in San Antonio, could tell you how difficult explaining allocation of damages in court could be. Spokespeople for the stock exchanges are declining comment, at least to the Wall Street Journal, at this time. The biggest hurdle the lawsuit faces though, is “a special regulatory status exchanges enjoy that shields them from certain legal challenges.”
Convenient, isn’t it? They’re supposed to be self-regulating, but increased opportunity and recent competition among other trading platforms means that internal policing of exchanges responsibilities has slacked off, and the Securities and Exchange Commission knows it: SEC Chairman Mary Jo White commented on it last year. What’s wrong with a little competition? Besides, as a San Antonio business litigation attorney would know, the potential for destabilizing markets, it’s just not fair.
What’s the difference between equity and ethical, though—fairness and competitive business? Are the concepts different when the entities party to them are a major determinant of our nation’s economic health? Should they be? These are the ultimate questions being posed by the lawsuit that may have lasting implications in the business world.