Alleged Conspiracy to Extract Artificially Inflated Payments for CUSIPs

American Bankers Association, FactSet Research Systems Inc. & S&P Global Inc. Subject of Antitrust Class Action Alleging Monopolistic Conduct, Conspiracy to Restrain Trade

You may have legal claims, if you are a data user in the U.S. that entered subscription agreements for CUSIP number licensing fees and paid those licensing fees directly to S&P’s (and now FactSet’s) CUSIP Global Services (“CGS”) division between March 7, 2018 through March 7, 2022 (the “Class Period”). 

On March 7, 2022, a class action lawsuit was filed in United States District Court, Southern District of New York, against the American Bankers Association (“ABA”), FactSet Research Systems Inc. (“FactSet”), and S&P Global, Inc. (“S&P).

According to the class action complaint, the antitrust lawsuit stems from S&P’s abuse of its monopoly power in the financial instruments identification market, and the Defendants’ conspiracy to maintain S&P’s (and now FactSet’s) monopoly power and unreasonably restrain trade in the financial instruments identification market, in order to extract artificially inflated payments from investors and other users of financial data through subscription agreements to access CUSIP numbers.

Plaintiff and other class members, according to the complaint, receive no financial data services from Defendants.  Instead, they obtain financial data from other sources that necessarily include CUSIP numbers. Defendants, allegedly, can hold up Plaintiff and members of the Class to pay prices unilaterally determined by the Defendants, not because there is anything special or valuable about the string of numbers and letters they generate, but merely because CUSIPs have been designated as the standard. 

Additionally, the Defendants, allegedly, have conspired to prevent competition from, and the implementation of, alternative free, or far more cost-friendly financial instrument identifiers of equal or superior efficiency and quality.

The class action complaint alleges that the Defendants extract the subscription fees through unfair, deceptive, and threatening business practices throughout the United States, including by threatening to cut off investors’ access to data, typically provided by third parties (e.g., Bloomberg) that is essential to the continuation of investors’ businesses. Further, S&P, through its CGS division, breached its commitment to the Accredited Standards Committee X9 to offer market participants, such as the Plaintiff and Class members, fair, reasonable, and non-discriminatory (“FRAND”) pricing for CUSIPs.

Allegedly, the Defendants conspired to maintain and perpetuate S&P’s financial instruments identifier monopoly and unreasonably restrain trade to collect substantial and unreasonable licensing fees (shared by S&P and ABA), which are not connected to the value of any particular CUSIP.  According to the complaint, they can only charge these fees due to S&P’s monopoly power by virtue of CUSIP being the standard.

According to the complaint, S&P generates revenue for licensing the right to CUSIPs, which it shares with the ABA in at least three ways.

First, S&P charges securities issuers a fee (usually about $280 per CUSIP number) to obtain CUSIP numbers for its securities. Second, S&P charges data providers (e.g., Bloomberg) licensing fees for using CUSIPs in its databases. Third, and more recently, S&P demands that data providers’ end users, such as the Plaintiff, or entities that otherwise download CUSIP numbers as part of financial data for their own use (“data users”), enter their own subscription agreements with S&P under the threat of stripping the CUSIP numbers from their data feeds if the unilaterally determined licensing fee is not paid. Defendants, according to the complaint, have a clear interest in requiring that all data users use only the CUSIP identifier system, because, upon information and belief, the ABA retains 30% of CGS’s licensing fees from all data users with the remainder kept by S&P (and now FactSet).

If you are a data user in the U.S. that entered subscription agreements for CUSIP number licensing fees and paid those licensing fees directly to S&P’s (and now FactSet’s) CUSIP Global Services (“CGS”) division between March 7, 2018 through March 7, 2022 (the “Class Period”), you are encouraged to contact Kehoe Law Firm, P.C., Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected], for a free, confidential consultation and no-obligation evaluation of potential legal claims.