Second Circuit Rules That Putative Auction Rate Securities Class Action Complaints Failed To Adequately Plead Antitrust Conspiracy

In Mayor and City Council of Baltimore v. Citigroup, Inc., No. 10-0722-cv(L) and 10-0867-cv(CON), 2013 WL 791397 (2d Cir. Mar. 5, 2013), the United States Court of Appeals for the Second Circuit upheld the dismissal of two related class action complaints brought on behalf of purchasers of auction rate securities ("ARS") and ARS issuers, respectively, against a number of large financial institutions. The complaints alleged that the financial institutions violated Section 1 of the Sherman Act, 15 U.S.C. § 1, by conspiring to stop purchasing ARS, thereby rendering ARS almost valueless and triggering the collapse of the ARS market. The Second Circuit based its holding upon a principle first announced by the United States Supreme CourtinBell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) [seeblog article here] — that antitrust complaints must allege sufficient factual matter to allow a fact-finder to plausibly infer that the plaintiffs' alleged injuries were the result of an