Supplemental Brief — Credit Suisse Securities (USA) LLC v. Billing

‘

git

gis! (i)

No. 05-1157

In the Supreme Court of the Anited States

CREDIT SUISSE FIRST BOSTON LTD., ET AL.,

Petitioners,

V.

GLEN BILLING, ET AL.,

Respondents.

On Petition for a Writ of Certiorari to

the United States Court of Appeals

for the Second Circuit

SUPPLEMENTAL BRIEF

FOR PETITIONERS

Supreme Court, U.S.

FiLE))

NOV 27 2006

OFFICE OF THE CLERK

ROBERT B. MCCAW

Louis R. COHEN

ALI M. STOEPPELWERTH

FRASER L. HUNTER, JR.

NOAH A. LEVINE

WILMER CUTLER PICKERING

HALE & DORR LLP

399 Park Avenue

New York, New York 10022

(212) 230-8800

Attorneys for Petitioner

STEPHEN M. SHAPIRO

Counsel of Record

KENNETH S. GELLER

TIMOTHY S. BISHOP

JOHN P. SCHMITZ

MAYER, BROWN, ROWE &

MAW LLP

1909 K Street, N.W.

Washington, D.C. 20006

(202) 263-3000

Attorneys for Petitioner

Citigroup Global Markets Inc. Merrill Lynch, Pierce,

Fenner & Smith Incorporated

Counsel for Petitioners

[Additional Counse/ Listed On Signature Page]

TABLE OF CONTENTS

SUPPLEMENTAL BRIEF FOR PETITIONERS ................

The immunity analysis presented by the

United States requires dismissal of these claims....... alas

The arguments presented by the United States

Immunity issues are properly resolved on a motion

i acestitiinaiiniissbsnintninepiniinimintncnieisimnes

The amicus brief filed by the United States confirms

the need for this Court’s review .............cccsseseceseeeeeesees

SIN <cnvssnsennsuneunenastanesnetonsmniasmanminesnasiatensenstnnsts 10

TABLE OF AUTHORITIES

Case: Page

Barry Aviation v. Land O'Lakes Mun. Airport Comm'n,

pg RF een 7

Brown v. Pro Football, Inc., 518 U.S. 231 (1996)............ 3,9

City of Sherrill, New York v. Oneida Indian

Nation of New York, 544 U.S. 197 (2005) ..............c00000 6

Crawford-El v. Britton, 523 U.S. 574 (1998) .......cccccssecceeeee 7

Department of Enforcement v. Invemed Associates,

No. CAF030014 (NASD Office of Hearing Officers

Bly Sis A inpnansinenneententnninsegticencnainniimestteneinenneed 4

Gordon v. New York Stock Exch., 422 U.S. 659

SETI PaiN hccrciubataiummetinbinetinininieaimnatnieneeineemeetd passim

Harris Trust & Savings Bank v. Salomon Smith Barney,

Fe ccetessicncenscnntstisninneianiniienmmncinesd 6

Hughes Tool Co. v. Trans World Airlines, 409 U.S. 363

Sart sataihestlsitaielbdiseeghniieiiparpaasiaeibiciniiiamatanainaaiaenned 9

Izumi Seimitsu Kogyo Kabushiki Kaisha v. U.S. Philips

ig, Se ey Be Oe cttsncicsnsenrinemnecesesenweninsmneel 6

Merrill Lynch, Pierce, Fenner & Smith, Inc. v.

Sy ERS EE, WI EI cccerinnsnittccinteintcnensscnsenntennenss 5

Mitchell v. Forsyth, 472 U.S. 511 (1985) .........cc0ccecceeeeeeseeees 7

Pan American World Airways, Inc. v. United States,

ee Ce I ccteceestriesincdabchiiiiinbiniinpedininiiatniaiganisl S

United States v. National Ass'n of Sec. Dealers,

a ee TE wicccesetctssnsedetetineastibinteanienennens passim

Van Buskirk v. New York Times Co., 325 F.3d 87

as NUT itisscesindachcnaiitcciaicnictpiasianlabeaniepbinsiciabialiuaupenetniidi 8

TABLE OF AUTHORITIES-Continued

Page

Verizon Comms. v. Law Offices of Curtis V. Trinko, LLP,

ge 1,4, 8,9

Xechem, Inc. v. Bristol-Myers Squibb Co., 372 F.3d 899

SIE TIE TE tcicsscateninesiietasniiasttanisabnienentnapagaadainteisiiiiitstdies 7

Yee v. City of Escondido, 503 U.S. 519 (1992).........::2ccceeees 6

Statute and Rule:

iis i I icprcctcnssshnbinciciintciieimncstapionninnapsiseaiiinsianeiiannies 5

| ES a ee oR ETE 6

Miscellaneous:

PHILLIP AREEDA & HERBERT HOVENKAMP, ANTITRUST

Be I Ge ccnncntcinsncstsnecnscseessenmntenensiiinemens 3,5

ROBERT L. STERN, EUGENE GRESSMAN, ET AL., SUPREME

COURT PRACTICE (8th ed. 2002).............ccccssrscessereereeees 5

SUPPLEMENTAL BRIEF FOR PETITIONERS

The United States has filed a brief signed by both the SEC

and the Antitrust Division urging this Court to grant certio-

rari a..d reverse the Second Circuit’s ruling denying antitrust

immunity. The United States explained in its brief that the

court of appeals’ erroneous decision “failed to give adequate

effect to the securities laws” and as a result threatens to “un-

dercut critical national regulatory policies and interfere with

the capital formation process.” U.S. Br. 8, 19. The United

States demonstrated that, “[a]s a practical matter,” the erro-

neous immunity standards adopted by the Second Circuit will

govern IPOs throughout the country because venue “will

generally lie within the Second Circuit.” /d. at 9. And it em-

phasized the “paramount importance” of avoiding disruption

of the “Nation’s vitally important financial markets” caused

by an immunity standard that will “chill legitimate activity.”

Accordingly, the Solicitor General has concluded that “cer-

tiorari should be granted” to resolve immunity issues as to

which “clarity” is “critical.” Ibid. The same conclusion was

previously expressed in amicus filings by the National Asso-

ciation of Securities Dealers and the New York Stock Ex-

change, self-regulatory organizations that, along with and

closely overseen by the SEC, have regulatory authority over

IPOs. See also Pet. Supp. Br. (June 12, 2006) (quoting SEC

Commissioner Paul Atkins).

Plaintiffs’ response to the United States confirms that this

Court’s review is necessary to overturn a denial of implied

immunity that is inconsistent with this Court’s decisions in

Gordon v. New York Stock Exch., 422 U.S. 659 (1975),

United States v. National Ass'n of Sec. Dealers, 422 U.S. 694

(1975), and Verizon Comms. v. Law Offices of Curtis V.

Trinko, 540 U.S. 398 (2004). Plaintiffs cite not one of those

controlling precedents in their supplemental submission and

do not attempt to address the United States’ showing that the

court of appeals’ ruling is a direct threat to the operation of

public securities markets regulated by the SEC.

2

Plaintiffs quote at length from the submissions of the Anti-

trust Division below arguing against immunity, without ac-

knowledging that the SEC was equally vigorous in urging

that immunity here is essential to the functioning of the secu-

rities regulatory regime in which it supervises all of the al-

leged conduct. The Solicitor General’s brief to this Court

“reflects the considered view of the United States.” U.S. Br.

4 n.2. The SEC and Antitrust Division now speak with one

voice in urging that certiorari should be granted to reverse an

erroneous decision on an “important and recurring” issue that

has produced “confusion in the lower courts”—an error that

threatens to gut “the statutory scheme for regulating public

offerings of securities.” Jd. at 7, 9. While plaintiffs quarrel

with the Solicitor General on the merits issues, they have no

answer to his showing that this case imperatively calls for

further review.

1. The immunity analysis presented by the United

States requires dismissal of these claims. Plaintiffs object

that the immunity standard set forth in the brief of the United

States—that securities market participants are immune from

antitrust suits that “ultimately rest on collaborative activities

that are either permitted under the securities laws or inextri-

cably intertwined with such permitted activities” (U.S. Br.

8)}—is a “new argument” that differs from petitioners’ immu-

nity arguments and has not previously been presented. But

the United States has properly focused on an important as-

pect of the repugnance analysis, which petitioners presented

in the petition for certiorari.

Petitioners have explained that immunity from plaintiffs’

suits flows directly from the standards sct forth by this Court

in Gordon and NASD. Scrutiny by an antitrust jury in a treble

damages action is plainly repugnant to the securities regula-

tory scheme because the SEC and SROs have by regulation

and enforcement action exercised “direct regulatory power”

over exactly the same tie-in and commission practices plain-

tiffs allege, and because exercise of regulatory authority is

3

“sufficiently pervasive” to oust the antitrust laws. See Pet.

20-24; Pet. Reply to Billing 2-4; Gordon, 422 U.S. at 682,

685; NASD, 422 U.S. at 730-734. But petitioners also agree

with the United States that immunity may be conferred here

under the rationale that all the conduct alleged is either per-

mitted by SEC regulation or is “directly related to” or “inex-

tricably linked” with permitted conduct (U.S. Br. 9, 11}—

formulations that rephrase the criteria set out in Gordon and

NASD but similarly seek to identify whether antitrust scru-

tiny may “conflict” with the administrative scheme.

The complaints, plaintiffs concede (at 3, 9), refer to a host

of joint activities that are permissible and encouraged by the

SEC, such as the operation of underwriting syndicates, con-

duct of road shows, and building the IPO book. The tie-in

and commission practices that plaintiffs allege are inextrica-

bly intertwined with those permitted activities. For example,

the United States has pointed out that the SEC has “specifi-

cally approved” book-building inquiries into a customer’s

long-term interest in an IPO stock and the price at which it

might accumulate a position in the aftermarket “as important

in determining the size and price of the offering” and “the

allocation of shares.” U.S. Br. 15. Distinguishing “legitimate

book-building” from attempts “to induce a bid or purchase,”

SEC guidance indicates, “depends on the particular facts and

circumstances” of each communication. Pet. App. 225a.

Whether particular conversations crossed the lines drawn

by the SEC under securities laws standards is inextricably

linked with book-building conduct approved by the agency.

A lay jury’s consideration of that question under competi-

tion-first antitrust principles would inevitably lead to conflict

with the SEC’s expert judgment and undermine the congres-

sional goal of consistent administrative supervision. See Pet.

App. 129a n.2, 156a, 196a-197a; Brown v. Pro Football, 518

U.S. 231, 240-242 (1996); AREEDA & HOVENKAMP, ANTI-

TRUST LAW 4 243a, at 77 (Supp. 2006) (“permitting the anti-

trust challenge [in these cases] permits a jury to decide an

4

issue that gave the SEC’s own experts considerable diffi-

culty”). The risk of jury condemnation and treble damages

awards to huge classes of investors based on the interpreta-

tion of a word or phrase uttered during book-building con-

versations would, the United States recognizes, “chill

legitimate activity” approved by the SEC and “effectively

Vitiate the immunity for the authorized conduct and thus con-

flict with the regulatory scheme.” U.S. Br. 9, 11. The fact

that plaintiffs are attacking permissible book-building prac-

tices and regulated practices directly linked to them lies at the

heart of petitioners’ case for immunity. See Pet. 9, 27-30;

Pet. Reply to Billing 6-9; see also Pet. App. 193a-194a.

The conduct plaintiffs allege with regard to commissions

is likewise “inextricably intertwined” with conduct permitted

by the SEC. Whether a commission payment is proper under

the securities laws is a complex question. See Pet. 8. The dif-

ficulty of parsing the facts concerning commission payments

and the need to apply securities standards in conducting that

inquiry is illustrated by Jnvemed Assocs., where an NASD

~~panel determined that higher-than-normal commissions paid

by customers seeking IPO allocations did not violate NASD

rules. See Pet. Reply to Pfeiffer 3-4. After a detailed review

of testimony concerning particular customer relationships

and commission payments, as well as expert evidence, the

hearing panel held that none of the 700 payments in question

was unlawful. There is no reason to expect that a lay jury ap-

plying general antitrust criteria would reach the same result.

As with plaintiffs’ tie-in allegations, fear of “mistaken infer-

ences” and “false condemnations” leading to open-ended

class action liability would cause market participants to re-

frain from engaging in permissible activities (Trinko, 540

U.S. at 414), making immunity essential to protect the regu-

latory scheme. See Gordon, 422 U.S. at 685, 690 (finding

immunity where SEC had “direct regulatory power” over

“rules and practices” regarding commissions); Pet. 26-28.

5

These conflicts with the regulatory scheme are of great

practical concern because plaintiffs’ antitrust suits are subject

to none of the limits that Congress and this Court have im-

posed on private securities actions to curb “abuses of the

class action vehicle in litigation involving nationally traded

securities,” including the “targeting of deep-pocket defen-

dants” and extraction of “extortionate settlements.” Merrill

Lynch v. Dabit, 126 S. Ct. 1503, 1510-1511 (2006). Those

safeguards, evaded here, include limiting recovery for “ma-

nipulative and deceptive practices” in public securities mar-

kets to single damages, as well as rigorous pleading, class

action, and discovery rules. 15 U.S.C. § 7ebb; Pet. 29-30; see

AREEDA & HOVENKAMP, supra, § 243, at 76-77 (Supp. 2006)

(observing that many claims of securities fraud or manipula-

tion “can be pled as an antitrust violation”).

2. The arguments presented by the United States are

fairly included in the question presented in the petition.

Plaintiffs are incorrect in asserting (at 4-6) that the United

States’ arguments are barred by Supreme Court Rule 14.1(a).

Under that rule a question presented “is deemed to comprise

every subsidiary question fairly included therein.” The “inex-

tricably intertwined” standard for implied immunity is easily

subsumed in petitioners’ question presented concerning the

circumstances under which courts should imply immunity

from an antitrust suit challenging heavily regulated conduct

during securities offerings. See Pet. 1; STERN, GRESSMAN, ET

AL., SUPREME COURT PRACTICE § 6.25(f), at 413 (8th ed.

2002) (“it is unnecessary to convert into a separate question

every subsidiary issue that is implicit or necessarily involved

in the question presented”). The position of the United States,

moreover, is simply a synthesis of arguments made by the

Antitrust Division and the SEC and considered by the courts

below, and a variation on the immunity arguments made by

petitioners throughout this litigation. U.S. Br. 4 n.2; supra,

pp. 2-4. “Once a federal claim is properly presented,” the

United States as amicus curiae is free to make “any argument

6

in support of that claim.” Harris Trust & Savings Bank v.

Salomon Smith Barney, 530 U.S. 238, 245 n.2 (2000).

The decisions relied on by plaintiffs have no relevance

here. In Yee v. City of Escondido, 503 U.S. 519, 537 (1992),

the regulatory takings claim this Court declined to consider

was legally distinct from the physical takings claim presented

in the petition and “neither of the two questions [was] sub-

sidiary to the other.” In /zumi Seimitsu v. U.S. Philips, 510

U.S. 27, 32 (1994), the question whether courts of appeals

should routinely vacate judgments when cases are settled on

appeal did not fairly include the “analytically and factually”

distinct issue whether the petitioner was improperly denied

leave to intervene. Here, by contrast, the arguments advanced

by the United States address the very same issue raised by

the question presented—the circumstances under which

courts should imply immunity from antitrust law challenges

to highly regulated conduct during securities offerings—and

so are fairly included in that question. See City of Sherrill v.

Oneida Indian Nation, 544 U.S. 197, 214 n.8 (2005).

Beyond this, none of plaintiffs’ arguments in the supple-

mental brief undermines our showing—supported by the

United States—of the certworthiness of these cases. The

United States agrees with petitioners that the Second Cir-

cuit’s decision will undercut the “critical national regulatory

policies” that Gordon and NASD sought to protect, that it is

of “paramount importance” that the court of appeals’ ruling

threatening market participants with treble damages not be

allowed to undermine “the capital formation process in this

country,” and that there is “continuing confusion in the lower

courts” regarding the “recurring” issue of when antitrust im-

munity should be implied. U.S. Br. 9, 11, 19. This case

clearly merits review regardless of the application of Rule

14.1(a) to any particular argument made by the United States.

3. Immunity issues are properly resolved on a motion

to dismiss. Plaintiffs assert (at 6-8) that the United States

7

would hold them to a “heightened pleading standard” that

requires them to negate an affirmative defense, at odds with

the principle that immunity is disfavored and should be im-

plied narrowly. But the Solicitor General nowhere in his brief

suggests that more has to be pled than Rule 8 requires. See

also Br. of the United States as Amicus Curiae in Bell Atlan-

tic v. Twombly, No. 05-1126. He simply contends that plain-

tiffs’ conclusory allegations, which on their face rest on

conduct either permitted by the SEC or intertwined with

permitted conduct, cannot be the basis for massive antitrust

suits that endanger the securities regulatory system and capi-

tal formation process. U.S. Br. 13-15.

Plaintiffs have pled themselves out of court, like the plain-

tiffs in NASD, whose claims were dismissed with prejudice

on implied immunity grounds. 422 U.S. at 697, aff g 374 F.

Supp. 95, 114 (D.D.C. 1973). Even if the threshold issue of

immunity is viewed as a defense, the decisions upon which

plaintiffs rely acknowledge that a defense “may be resolved

definitively on the face of the complaint” when the plaintiff

pleads the basis for the defense. Barry Aviation v. Land

O'Lakes Mun. Airport, 377 F.3d 682, 688 (7th Cir. 2004);

see also Xechem, Inc. v. Bristol-Myers Squibb, 372 F.3d 899,

901 (7th Cir. 2004). And plaintiffs concede (at 7 n.11) that

the district court here “properly held that implied immunity

was ‘an affirmative defense that appears on the face of the

complaint, and as such is properly addressed at the motion to

dismiss stage.’”

Every motion to dismiss on immunity grounds—even the

very different qualified immunity ground at issue in most of

plaintiffs’ authorities—requires the district judge to look at

the facts pled in the complaint to see if immunity applies.

E.g., Mitchell v. Forsyth, 472 U.S. 511, 528 (1985) (“resolu-

tion of these [qualified immunity] issues will entail consid-

eration of the factual allegations that make up the plaintiff's

claims for relief’); Crawford-El v. Britton, 523 U.S. 574, 598

(1998) (“the district court should resolve that threshold ques-

tion [of qualified immunity] before permitting discovery” by

deciding “whether, assuming the truth of the plaintiff's alle-

gations, the official’s conduct violated clearly established

law”). Whether “allowance of an antitrust suit would conflict

with the operation of the regulatory scheme” is a “legal ques-

tion” well suited to determination on the pleadings. Gordon,

422 U.S. at 688; see NASD, 422 U.S. at 700-702. Plaintiffs

allege conduct that is all closely regulated by the SEC and

SROs and that is either permitted by regulators or inextrica-

bly intertwined with permitted activity. It is therefore a

straightforward matter to determine that immunity is required

to allow the securities regulatory scheme to function as Con-

gress intended, whether that question is analyzed under the

principles set forth in Gordon and NASD or the Solicitor

General’s interpretation of them. See supra, pp. 2-5; Van

Buskirk v. New York Times, 325 F.3d 87, 91-92 (2d Cir.

2003) (dismissal with prejudice proper when complaint is

“not reasonably susceptible” to an interpretation that cures

the legal deficiency and provides no “indication that a valid

claim might be stated””’).

4. Plaintiffs’ conspiracy arguments do not overcome

immunity. Citing decisions of this Court which are not rele-

vant because the conduct at issue was not subject to regula-

tory oversight, plaintiffs assert that a “prohibited conspiracy”

or other “prohibited activity” carried out in the course of law-

ful conduct cannot be impliedly immune. PI. Supp. Br. 8-10

& n.14. This Court’s precedents contradict that argument.

For example, by the time Gordon reached this Court the SEC

had outlawed fixed commission rates as horizontal price fix-

ing, yet this Court implied immunity. 422 U.S. at 682. In

NASD plaintiffs alleged horizontal and vertical conspiracies

to fix prices and quash developiaent of a secondary market in

mutual fund shares, yet immunity was implied. 422 U.S. at

701-704. In Trinko this Court observed that had it not been

for an antitrust savings clause the regulatory scheme created

by the Telecommunications Act would have been a “good

9

candidate for implication of antitrust immunity,” even though

plaintiffs alleged a clear violation of a statutory duty and

Verizon had entered into a consent decree and paid millions

of dollars to the United States and competitors. 540 U.S. at

401, 403-406. In Pan Am. Airways v. United States, 371 U.S.

296 (1963), the Civil Aeronautics Board condemned a joint

ownership arrangement as “disruptive of the regime visual-

ized by” Congress in the Federal Aviation Act and “out of

harmony with the [FAA’s] statutory standards for competi-

tion,” yet this Court held that an antitrust challenge to the

arrangement “should have been dismissed” because whether

“transactions of that character meet the standards of competi-

tion and monopoly provided by the [FAA] is peculiarly a

question for the Board.” /d. at 309-313 & n.19; see id. at 310

(“If the courts were to intrude independently with their con-

struction of the antitrust laws, two regimes might collide”).

See also Hughes Tool Co. v. TWA, 409 U.S. 363, 405 n.18

(1973) (implying immunity although, according to the dis-

senting Justices, the challenged practices were undertaken

“without [regulatory] approval or knowledge’’); Brown, 518

U.S. at 235 (1996) (implying immunity though defendants

“unilaterally implemented” a change in terms of employment

that appeared to violate federal Jabor laws).

It is thus demonstrably false to claim, as plaintiffs do (at

9), that “forming and implementing [al prohibited conspir-

acy” cannot be immune from antitrust scrutiny, even if the

conduct is regulated by an expert agency that takes competi-

tion into account. And it is beside the point here, where the

question whether particular conduct was prohibited depends

on nuanced distinctions drawn under securities law standards.

The fact that antitrust jucies applying competition-first prin-

ciples will not replicate securities regulators’ judgments cre-

ates the potential for conflict that makes implied immunity

necessary to protect the regulatory scheme.

5. The amicus brief filed by the United States confirms

the need for this Court’s review. Contrary to plaintiffs’

10

contention (at 10) that “the United States’ apparent position

that a conspiracy to require tie-ins or laddering does not vio-

late the antitrust laws” provides “no reason” for this Court’s

review, that position is a compelling reason to grant certio-

rari. The Solicitor General has shown that the Second Circuit

erred as a matter of law regarding an issue of enormous im-

portance to the capital formation process. Plaintiffs have not

begun to suggest how their allegations could be viewed as

anything other than a direct attack on conduct that is permit-

ted by the SEC and closely intertwined with permitted activ-

ity. And they have said not a word to refute our showing that

under Gordon, NASD, and Trinko, the danger of conflict with

the securities regulatory scheme is inescapable and severe

when treble damages attacks are made on permissible syndi-

cation practices and directly related underwriting activities

that are closely supervised by the expert agency.

Although plaintiffs assert (at 10) that the question pre-

sented is not a recurring one, they do not deny our show-

ing—reinforced by the United States—that these “epic” class

actions could be refiled whenever the stock market declines.

The same claim could always be made: that underwriters act-

ing together in syndicates “agreed” and made inquiries of

customers about their aftermarket interest in the IPO stock.

Then nationwide class action antitrust proceedings focused

on hundreds of [POs could be utilized to extract immense

settlements, given the inevitable risk of false condemnations

by antitrust juries. The United States is right in saying that

this would cripple our financial markets.

CONCLUSION

The petition for writ of certiorari should be granted.

Respectfully submitted.

ROBERT B. MCCAW

LOUIS R. COHEN

ALI M. STOEPPELWERTH

FRASER L. HUNTER, JR.

NOAH A. LEVINE

WILMER CUTLER PICKERING

HALE & DorR LLP

399 Park Avenue

New York, New York 10022

(212) 230-8800

Attorneys for Petitioner

Citigroup Global Markets

Inc.

ANDREW J. FRACKMAN

Timothy J. MURIS

RICHARD G. PARKER

BRENDAN DOWD

O”’MELVENY & MYERS LLP

Seven Times Square

New York, New York 10036

(212) 326-2000

Attorneys for Petitioner

Robertson Stephens, Inc.

CARTER G. PHILLIPS

A. ROBERT PIETRZAK

JOEL M. MITNICK

SIDLEY AUSTIN LLP

787 Seventh Avenue

New York, New York 10019

(212) 839-5300

Attorneys for Petitioner

Deutsche Bank Securities Inc.

STEPHEN M. SHAPIRO

Counsel of Record

KENNETH S. GELLER

TIMOTHY S. BISHOP

JOHN P. SCHMITZ

MAYER, BROWN, ROWE &

MAW LLP

1909 K Street, N.W.

Washington, D.C. 20006

(202) 263-3000

Attorneys for Petitioner

Merrill Lynch, Pierce,

Fenner & Smith Incorpo-

rated

ANDREW B. CLUBOK

RICHARD A. CORDRAY

BRANT W. BISHOP

KIRKLAND & ELLis LLP

655 15th Street, N.W.

Washington, D.C. 20005

(202) 879-5000

Attorneys for Petitioner

Morgan Stanley & Co. Inc.

SHEPARD GOLDFEIN

PREETA D. BANSAL

JAMES A. KEYTE

SKADDEN, ARPS, SLATE,

MEAGHER & FLOM LLP

Four Times Square

New York, New York 10036

(212) 735-3000

Attorneys for Petitioner

Janus Capital Management

LLC

RICHARD A. CIRILLO

KAREN R. KOWALSKI

KING & SPALDING LLP

1185 Avenue of the Americas

New York, New York 10036

(212) 556-2100

Attorneys for Petitioner

Credit Suisse First Boston

LLC

MOSES SILVERMAN

PHILIP G. BARBER

PAUL, WEISS, RIFKIND,

WHARTON & GARRISON LLP

1285 Avenue of the Americas

New York, New York 10019

(212) 373-3000

Attorneys for Petitioner

Lehman Brothers Inc.

JON R. ROELLKE

JEFFREY H. DRICHTA

CLIFFORD CHANCE US LLP

2001 K Street, N.W.

Washington, D.C. 20006-1001

(202) 912-5000

Attorneys for Petitioner

Merrill Lynch, Pierce,

Fenner & Smith Incorporated

PAUL GONSON

GLENN R. REICHARDT

KIRKPATRICK & LOCKHART

NICHOLSON GRAHAM LLP

1601 K Street, N.W.

Washington, D.C. 20006

(202) 778-9000

Attorneys for Petitioner

Merrill Lynch, Pierce,

Fenner & Smith Incorporated

GANDOLFO V. DIBLASI

PENNY SHANE

DAVID M.J. REIN

RICHARD J.L. LOMUSCIO

SULLIVAN & CROMWELL LLP

125 Broad Street

New York, New York 10004

(212) 558-4000

Attorneys for Petitioners

The Goldman Sachs Group,

Inc. and Goldman, Sachs &

Co.

RANDY M. MASTRO

JOHN A. HERFORT

RICHARD FALEK

GIBSON, DUNN & CRUTCHER

LLP

200 Park Avenue

New York, New York 10166

(212) 351-4000

Attorneys for Petitioner

Bear, Stearns & Co., Inc.

STEYEN WOLOWITZ

MATTHEW INGBER

MAYER, BROWN, ROWE &

MAw LLP

1675 Broadway

New York, New York 10019

(212) 506-2500

Attorneys for Petitioner

Comerica, Inc.

GERALD J. FIELDS

KEVIN C. LOGUE

PAUL HASTINGS JANOFSK /

& WALKER LLP

75 East 55th Street

New York, New York 10022

(212) 318-6000

Attorneys for Petitioners

Van Wagoner Capital

Management, Inc. and Van

Wagoner Funds, Inc.

NOVEMBER 2006

JOHN D. DONOVAN, JR.

ROBERT G. JONES

ROPES & GRAY LLP

One International Place

Boston, Massachusetts 02110

(617) 951-7000

Attorneys for Petitioners

Fidelity Distributors Corp.,

Fidelity Brokerage Services

LLC, and Fidelity

Investments Institutional

Services Co., Inc.

No. 05-1157

Jn the Supreme Court of the United States

CREDIT SUISSE FIRST BOSTON LTD., ET AL., PETITIONERS,

Vv.

GLEN BILLING, ET AL., RESPONDENTS.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Second Circuit

CERTIFICATE OF SERVICE

I, Timothy S. Bishop, counsel for petitioners and a member of

the Bar of this Court, certify that on November 27, 2006, I served

three copies of the Supplemental Brief for Petitioners in the above-

captioned case via UPS overnight, addressed to:

Christopher Lovell Russel H. Beatie

Lovell Stewart & Halebian LLP Beatie & Osborn LLP

$00 Fifth Avenue 521 Fifth Avenue

New York, NY 10110 New York, NY 10175

(212) 608-1900 (212) 888-9000

Counsel for Respondents Glen Counsel for Respondent

Billing et al. Milton Pfeiffer

Paul D. Clement

Solicitor General of the United States

Room 5614

Department of Justice

950 Pennsylvania Ave., N.W.

Washington, DC 20530-0001

(202) 514-2217

I certify that all parties required to be served have been served.

. ——_, Bee

Timothy S. Bistrop”