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Disappointed US investors cannot use anti-trust laws to sue banks they accuse of fixing the price of initial public offerings (IPO) of some 900 companies in the late 1990s.

The Supreme Court voted seven to one that such allegations should be ruled on by the Securities and Exchange Commission (SEC).

The suit alleged that big banks worked with brokers to fix the price of IPOs to the detriment of the US public. They also used "laddering" - favoured clients who got first choice of newly issued shares also had to buy shares as the price rose. This helped produce the big price jumps seen in the early trading of newly listed public companies in the late 1990s. It became common practice for the banks to ensure share offerings were effectively underwritten in this way.

The case also alleged banks paid unusually high commissions for these services. Finally, the banks were accused of "tying" - linking purchases of popular stocks with those of much less popular shares.

But the Supremes ruled on Monday that the SEC is the correct body to deal with such complaints.

Justice Stephen Breyer said such cases brought: "A substantial risk of injury to the securities markets."

Breyer said the SEC is likely to do a better job. The decision said: "A fine, complex, detailed line separates activity that the SEC permits or encourages from activity that it forbids. And the SEC has the expertise to distinguish what is forbidden from what is allowed."

It does not mean the issue is over - the SEC is still investigating several IPOs and could still rule in the investors' favour. But a victory under anti-trust legislation would have brought bigger fines and settlements for investors.

The whole decision is available as a 30 page pdf here. ®

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