United States v. Stanley
881 F. Supp. 2d 563
S.D.N.Y.2012Background
- Government filed Tunney Act motion for final consent decree settling antitrust claim against Morgan Stanley.
- Complaint alleges Morgan Stanley aided KeySpan in manipulating electricity prices via a swap/hedge arrangement.
- Swaps provided KeySpan revenue from Astoria’s auction performance, elevating capacity prices.
- Morgan Stanley acted as counterparty to both swap and hedge from 2006–2009, earning about $21.6 million.
- Consent Decree requires Morgan Stanley to disgorge $4.8 million to the U.S. Treasury; Tunney Act process followed with public comments.
- Court notes public commenters (PSC, AARP, and lawmakers) objected to adequacy, lack of admission, and remittance to ratepayers.
- Court grants motion, concluding disgorgement is adequate and aligns with public interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether $4.8 million disgorgement is adequate relief | Government: amount is adequate deterrence and within public interest | Morgan Stanley: should be closer to $21.6 million revenue | Yes, disgorgement adequate within public interest |
| Whether admission of wrongdoing is required | (not stated explicitly) | AARP argues admission should be required | Admission not required for consent decree approval |
| Whether disgorged funds should go to ratepayers vs. Treasury | (not stated explicitly) | (not stated explicitly) | Remittance to Treasury appropriate; satisfies public interest and avoids other doctrines |
| Whether Tunney Act public-interest standard supports the decree | Consent decree within public interest given deterrence and novelty of theory | (not stated explicitly) | Decree is in the public interest; court defers to Government’s settlement decision |
Key Cases Cited
- Citigroup, Inc. v. Citigroup Global Mkts. Inc., 673 F.3d 158 (2d Cir. 2012) (public-interest review limited; admission not required for settlement approval)
- Massachusetts v. Microsoft Corp., 373 F.3d 1199 (D.C. Cir. 2004) (narrow public-interest review under Tunney Act)
- Alex. Brown & Sons v. Copyright, 963 F. Supp. 235 (S.D.N.Y. 1997) (limits on court’s second-guessing of agency settlements)
- United States v. Int’l Bus. Mach. Corp., 163 F.3d 737 (2d Cir. 1998) (framework for Tunney Act public-interest analysis)
- United States v. Keyspan Corp., 763 F. Supp. 2d 633 (S.D.N.Y. 2011) (disgorgement in settlement with public utility context)
- SEC v. Citigroup Global Markets Inc., 673 F.3d 158 (2d Cir. 2012) (agency settlements; admission not prerequisite; public-interest inquiry)
- Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (Supreme Court 1984) (deference to agency choices in regulatory decisions)
- Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17 (2d Cir. 1994) (disgorgement and ratepayer considerations in public remedies)
- Bear, Stearns & Co. v. SEC, 626 F. Supp. 2d 402 (S.D.N.Y. 2009) (disgorgement to Treasury serves public benefit)