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    83 S.Ct. 1246

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    1246 looked like to me might start—there were five or six cars driving around the park at the time, white people.” But that of- ficer also stated that this “was [not] un- usual traffic for that time of day.” And the park was 60 acres in area. Respond- ent 209, contends the petitioners were fore- warned that their conduct would be held to violate the statute. See Samuels v. State, 108 Ga.App. 66, 118 S.E.2d 231. But it is sufficient to say again that a gen- erally worded statute, when construed to punish conduct which eannot be con- stitutionally punished, is unconstitution- ally vague. And the possibility of dis- order by others cannot justify exclusion of persons from a place if they otherwise have a constitutional right (founded up- fon the Equal Protection Clause) to be present. Taylor v. Louisiana, 370 U.S. 164, 82 S.Ct, 1188, 8 LEd2d 395; Gar- ner v. Louisiana, 368 U.S. 157, 174, 82 S.Ct, 248, 257, 7 L-Ed.2d 207;' see also Buchanan v. Warley, 245 U.S. 60, 80- 81, 88 S.Ct. 16, 20, 62 L.Ed. 149. (11) Third, it is said that the peti- tioners were guilty of a breach of the peace because a park rule reserved the playground for the use of younger people at the time. However, neither the exist- ‘ence nor the posting of any such rule has been proved, Cf, Lambert v. California, 355 U.S. 225, 208, 78 S.Ct, 240, 242, 2 LEd2d 228. The police oficers did not inform them of it because they had no knowledge of any such rule themselves. Furthermore, it is conceded that there was no sign or printed regulation which would give notice of any such rule, [12,13] Under any view of the facts alleged to constitute the violation it ean- not be maintained that petitioners had adequate notice that their conduct was prohibited by the breach of the peace statute. It is well established that a conviction under a criminal enactment which docs not give adequate notice that the conduct charged is prohibited is viola- tive of due process, Lanzetta v, New Jersey, 806 U.S, 451, 69 S.Ct. 618, 83 L. Ed. 888; Connally v. General Construe- 83 SUPREME COURT REPORTER 973 US, 292 tion Co,, 269 U.S. 885, 46 S.Ct. 128, 70 LEd. 322; United States v. L. Cohen Grocery Co, 255 U.S. 81, 41 S.Ct. 298, 65 L.Ed. 516; see also United States v. Na- tional Dairy Products Corp., 972 U.S. 29, 83 S.Ct, 594, 9 LEd2d 661. Reversed. avs. 1 Harold J. SILVER, doing business as Mu- nlelpal Securities Company, et al, Petitioners, NEW YORK STOCK EXCHANGE. No. 150, Argued Feb. 25 and 25, 1963, ‘Decided May 20, 1963, Action by corporate broker-dealer in ‘municipal bonds in over-the-counter mar- kket and by executrix of sole proprietor of another broker-dealer against the stock exchange for injunctive relief and treble damages for violation of Sherman Act arising from exchange's withdrawal of private wire connections between broker- dealers and exchange members, The United States District Court for the Southern District of New York, 196 F. Supp. 209, granted summary judgment adverse to exchange, and exchange ap- pealed. The Court of Appeals, Second Circuit, 302 F.2d 714, reversed judgment, and broker-dealer and executrix brought error. The Supreme Court, Mr. Justice Goldberg, held that stock exchange vio- lated Sherman Act and, therefore, was liable under Clayton Act for withdrawing the private wire connections without no- tice or opportunity for hearing. Judgment reversed, and cause re- ‘manded with directions. 378 U.S, S41 SILVER v, NEW YORK STOCK EXCHANGE 1247 Cite an 8 8.0126 (1069) Mr, Justice Stewart and Mr. Jus- tice Harlan dissented. 1 Monopolies €17(1.8) Removal of private wire connections between broker-dealer in over-the-count- er security market and exchange mem- bers by collective action of exchange and its members will constitute @ per se vio- lation of Sherman Act in absence of oth- er federal regulation. Sherman Anti- ‘Trust Act, § 1, 15 USCA. § 1. 2, Monopolles 1701.6) Fact that concensus underlying col~ lective action was arrived at when stock exchange members bound themselves to comply with exchange's directives upon being admitted to membership, rather than when specific issue of qualifications of broker-dealers in municipal bonds in over-the-counter market to have private wire connections with exchange members arose, did not diminish collective nature of action for purposes of determining whether Sherman Act had been violated. Sherman Anti-Trust Act, §§ 1, 2, 15 U.S. CA. §§ 1,2 8. Monopolies €=17(1.6) Fact that valuable private wire con- nection service which connected broker- dealers in over-the-counter security mar- ket with stock exchange members, which was germane to broker-dealers’ business, and which was important to their effec- tive competition with others was with- held from them by collective action on part of stock exchange and its members ‘was enough to create Sherman Act viola- tion, Sherman Anti-Trust Act, §§ 1, 2, 15 US.CA, §§ 1, 2. 4. Exchanges 4 Stock exchange’s statutory duty of self-regulation includes regulation of ex- change members’ doing of business with nonmembers in over-the-counter market and, in particular, regulation of private wire connections between members and nonmembers, Securities Exchange Act of 1934, § 6(b, d), 15 US.CA. § 78f(b, a. 5, Exchanges 2 ‘Monopoiles €=17(1.6) Scheme of antitrust laws and scheme of Securities Exchange Act of 1984 relating to stock exchange's duty of self- regulation of members doing business with nonmembers in over-the-counter market are to be reconciled with one another, rather than construed so that fone scheme is completely ousted. Sher- ‘man Anti-Trust Act, §§ 1, 2, 15 U.S.C.A. §§ 1, 2; Clayton Act, §§ 4, 14, 15 US. G.A. §§ 15, 26; Securities Exchange Act of 1934, § 6(b, d), 15 US.CA. § 78f(b, a). 6, Statutes 6158 Repeals by implication are not favor ed, 1. Monopoties 610 Implied repeater of antitrust laws by Securities Exchange Act provision creating a duty of exchange self-regula- tion would exist only if necessary to make Securities Exchange Act work and then only to minimum extent necessary. Seeu- rities Exchange Act of 1934, § 1 et sea., 15 USGA. § 78a et seq-; Sherman Anti-Trust Aet, §§ 1,2; 15 U.S.C.A. §§1, 2; Clayton Act, §§ 4, 14, 15 US.CA. §§ 15, 26. 8 Exchanges C4 Securities Exchange Act provision giving Securities and Exchange Commi sion power to request exchanges to make changes in their rules gives Commission implied power to disapprove any rules adopted by an exchange but does not give Commission jurisdietion to review par- ticular instances of enforcement of ex- change rules. Sherman Anti-Trust Act, $1, 15 USCA. § 1. 9. Monopolies ©24(7), 28(1.5) Corperate broker-dealers in over-th counter security market could resort di- rectly to court without first secking relief before Securities and Exchange Con mission for alleged Sherman Act viola- tion arising from exchange’s withdrawal of private wire connections between brok- er-dealers and exchange members. Se- curities Exchange Act of 1934, §§ 6(a) 1248 (4), 19(b), 15 USCA. §§ 78fa) (4), Tes(b). 10, Exchanges 4 Monopolies 17(1.6) Question of antitrust exemption ap- plicable to stock exckange's statutory duty of self-regulation does not involve any problem of conflict or co-extensive- ness of coverage with regulatory power of the Securities and Exchange Commis- sion. Sherman Anti-Trust Act, §§ 1, 2, 15 USCA. §§ 1, 2; Clayton Act, §§ 4, 14, 15 USCA. §3 15, 26; Securities Ex: change Act of 1934, §§ 6(a) (4), 19(b), 15 U.S.C.A. §§ 78i(a) (4), 783(b). AL, Exchanges 4 Some form of review of stock ex- change self-policing under Securities Ex- change Act is not incompatible with fal- fillment of aims of Act, whether by ad- ministrative ageney or by courts. Se- curities Exchange Act of 1934, §1 et seq, 15 US.CA. § 78a et Seq, 12, Monopolies €10 Antitrust laws serve, among other things, to protect competitive freedom, i.e, freedom of individual business uni to compete unhindered by group action of others, and, therefore, antitrust laws are peculiarly appropriate as a check up- ‘on anticompetitive acts of stock exchang- ‘es which conflict with their duty to keep their operations and those of their mem- bers honest and viable. Securities Ex- change Act of 1984, § 1 et seq,, 15 U.S. CAA. § 7Ba et seq.; Clayton Act, §§ 4, 14, 15 US.CA. §§ 15, 26. 18. Monopolies €17(1.6) Under aegis of rule of reason, tra- itional antitrust concepts are flexible ‘enough to permit stock exchange suffi- cient breathing space within which to carry out mandate of Securities Ex- change Act relating to exchange’s self- regulation of exchange members. Secu- rities Exchange Act of 1934, § 6(b, @), 1 USCA. § T8f(b, a). 14, Monopolies 17(1.6) Statutory scheme of Securities Ex change Act of 1934 does not totally ex- 88 SUPREME COURT REPORTER 973 US, 941 empt from antitrust laws stock ex- change's self-regulation of exchange members’ business with nonmembers, but particular instances of exchange self- regulation which fall within scope and purposes of Securities Exchange Act may be regarded as justified in answer to assertion of an antitrust claim, Sher- man Anti-Trust Act, §§ 1, 2, 15 USC.A, §§ 1, 2; Clayton Act, §§ 4, 14, 15 US. C.A. §§ 15, 26; Securities Exchange Act of 1934, § 6(b, d), 15 USCA. § 78i(b, a. 15, Monopolies ©17(1.6) Stock exchange ‘self-regulation is justified as an exemstion from antitrust charges only to extent necessary to pro- tect achievement of aims of Securities Exchange Act, and no justification can be offered for self-regulation conducted without provision for some method of telling protesting nonmember why an ex- change rule is being invoked to harm him and of allowing him to reply in ex- planation of his position. Securities Ex- Change Act of 1994 § 1 et seq, 15 US C.A. § TBa et seq. 16, Monopolies €=17(1.6) Securities Exchange Act of 1934 af- fords no justification for anti-competi- tive collective action taken by stock ex- change members in regard to nonmem- bers without according fair procedures, Sherman Anti-Trust Act, §§ 1, 2, 15 U.S. C.A. §§ 1, 2; Clayton Act, §§ 4, 14, 15 USCA. §§ 15, 28; Securities Exchange Act of 1984, § 6(b, d), 15 USCA, § 78f a. 11. Exchanges 4 Congress in effecting a scheme of stock exchange self-regulation designed to insure fair dealing cannot be thowght to have sanctioned and protected self- regulative activity which is carried out in a fundamentally unfair manner, Seeuri- ties Exchange Act of 1984, § 6(b, d), 15 USCA. § 7510, d). 18, Exchanges 12 ‘Monopolies 27(1.6) Stock exchange exceeded scope of its authority under Securities Exchange $73 US. 43 SILVER v, NEW YORK STOCK EXCHANGE 1249 ‘lee as 538% 1210 (1068) Act to engage in self-regulation in with- drawing private wire connections be- tween broker-dealers in municipal bonds in over-the-counter market and exchange members without affording broker-deal- ‘ers notice and a hearing, and, therefore, act did not justify the withdrawal which otherwise constituted a Sherman Act violation, Securities Exchange Act of 1934, § 1 et soq., 15 USCA. § 78a et seq.; Sherman Anti-Trust Act, §§ 1, 2 15 USCA. §§ 1, 2 19, Exchanges C4 Monopolies 1701.8) Securities and Exchange Commis- ssion has power to direct stock exchange ‘to adopt general rule providing for hear- ing and attendant procedures as to non- members of exchange, but any rule atopt- ed would, to be consonant with antitrust Jaws, have to provide as a minimum the procedural safeguards which those laws made imperative. Securities and Ex- change Act of 1934, § 19(b), 15 USCA. § 78a(b); Sherman Anti-Trust Act, §§ 1, 2, 15 USCA. §§ 1, 2; Clayton Act, §§ 4, 14, 15 USCA. §§ 15, 26. 20, Exchanges ¢4 Congress in effecting scheme of self- regulation designed to insure fair deal- ing in regard to stock exchanges could not be thought to have sanctioned and protected an exchange self-regulative ac- tivity when carried out in a fundamental- ly unfair manner. Securities Exchange Act of 1984, § 1 et seq., 15 U.S.C.A. § 783 et sea. 21, Monopolies ©17(1.6) Stock exchange violated Sherman ‘Act and, therefore, was liable under Clay- ton Act to corporate dealers in municipal bonds in over-the-counter market for hat ing withdrawn broker-dealers’ private wire connections between broker-cealers and exchange members without notice or opportunity for hearing. Securities Bx- change Act of 1934, § 1 et seq,, 15 U.S. C.A. § 78a et seq.; Sherman Anti-Trust Act, § 1, 15 US.CA. § 1; Clayton Act, §8 4, 16, 15 USCA. §§ 15, 26. san 22. Associations €=20(1) Private association's failure to af- ford procedural safeguards may result in imposition of damage liability without in- quiry into whether association's action lacked substantive basis. David 1. Shapiro, Was! for petitioners. A. Dorald MacKinnon, New York City for respondent. Archibald Cox, Sol. Gen., for the United States, as amicus curiae, by special leave of Court. Mr, Justice GOLDBERG delivered the ‘opinion of the Court, We deal here today with the question, of great importance to, the public and the financial community, of whether and to what extent the federal antitrust laws apply to securities exchanges regulated by the Securities Exchange Act of 1984. More particularly, the question 243 is wheth- er the New York Stock Exchange is to be held liable to a nonmember broker- dealer under the antitrust laws or regard- ed as impliedly immune therefrom when, pursuant to rules the Exchange has adopted under the Securities Exchange ‘Act of 1984, it orders a number of its members to remove private direct tele- phone wire connections previously in op- eration between their offices and those of the nonmember, without giving the nonmember notice, assigning him any reason for the action, or affording him ‘an opportunity to be heard. 1 ‘The facts material to resolution of this, question are not in dispute. Harold J. Silver, who died during the pendency of this action, entered the securities busi ness in Dallas, Texas, in 1955, by estab- lishing the predecessor of petitioner Mu- nicipal Securities (Municipal) to deal primarily in municipal bonds. ‘The busi- ness of Municipal having increased steadily, Silver, in June 1958, established petitioner Municipal Securities, Ine, (Mu- 1250 nicipal, Inc.), to trade in corporate over- the-counter securities. Both firms are registered broker-dealers and members of the National Associetion of Securi- ties Dealers, Inc. (NASD); neither is ‘a member of the respondent Exchange. Instantaneous commenication with firms in the mainstream of the securities business is of great significance to a brok- er-dealer not a member of the Exchange, and Silver took steps to see that this was established for his firms. Municipal ob- tained direct private telephone wire con- nections with the municipal bond depart- ments of a number of securities firms (three of which were members of the Ex- change) and banks, and Municipal, Inc, arranged for private wires to the corpo- rate securities trading departments of 10 member firms of the Exchange, as well as to the trading desks of a number of ron- member firms. Pursuant to the requirements of the Exchange's rules, ll but one of the mem- ber firms which had granted private wires to Municipal, Ine., applied to the Ex- change for approval of the connections? During the summer of 1958 the Exchange granted “temporary approval” for these, as well as for a direct teletype connection to a member firm in New York City and for stock ticker service to be furnished to petitioners directly from the floor of the Exchange. On February 12, 1959, without prior notice to Silver, his firms, or anyone con- nected with them, the Exchange's De- partment of Member Firms decided to disapprove the private wire and related applications. Notice was sent to the 1. Exchange approval was never sought for Manieipa’s private wires to the munieipal ‘ond departments of member Srme. pretrial stages of this litigation, the Exchange dieeloned most of the reasons for ite action, snd these ‘aro summarized and_diseussed in the opinions of both the Distret Court, 406 F.Supp, 200, 216-217, 295-297, and the Court of Appeals, 902 2d 714, 716. In view, however, of the disposition we 88 SUPREME COURT REPORTER 373 US, 343 ‘member firms involved, instructing them to discontinue the wires, a directive with which compliance was required by the Exchange's Constitution and rules, These firms in turn notified Silver that the private wires wou'd have to be dis- continued, and the Exchange advised him directly of the discontinuance of the stock ticker service. ‘The wires and tick- er were all removed by the beginning of Mareh, By telephone calls, letters, and a personal trip to New York, Silver sought an explanation from the Exchange of the reascn for its decision, but was repeatedly told it was the poliey of the Exchange not to disclose the reasons for such action? Petitioners contend that their volume of business dropped substantially there- after and that their profits fell, due to a combination of forces all stemming from the removal of the private wires—the consequent inability to obtain quotations quickly, the inconvenience to other trad- calling retitioners, and the stigma ng to the disapproval, As a re- sult of this change in fortunes, petition- ers contend, Municipal, Inc., soon ceased funetioning as an operating business or- ganization, and Municipal has remained in business only on a greatly diminished scale. ‘The present litigation was commenced by Silver as proprietor of Municipal and by Municipal, Ine., against the Exchange in April 1959, in the Southern District of New York Three causes of action were ascerted, ‘The first, seeking an in- junction and treble damages alleged ‘that the Exchange had, in violation of §§ rake of the ease lereafter, there is no need to set forth these reasone im dota {n this opinion 4 Silver died while the case was pending Court of Appeals, and his ‘widow. "a B. Silver, a2 exocateix of his ea: was eubstitted for him, 4. ‘These forms of relief are provided by $8 4.and 16 of tho Clayton Act, 15 USC. 1615, 28. 378 U8, 847 SILVER v, NEW YORK STOCK EXCHANGE 1251 (Chee 2.0% 126 196) 1 and 2 of the Sherman Act, conspired with its member firms to deprive ps tioners of their private wire connections ad stock ticker service, ‘The second alleged that the Exchange had tortiously induced its member firms to breach their contracts for wire connections with pe- titioners, and the third asserted that the Exchange's action constituted a tort of intentional and wrongful harm inflicted without reasonable cause. Petitioners moved for summary judg- ment on the antitrust claim, and for an accompanying permanent injunction against the Exchange's coereion of its ‘members into refusing to provide private wire connections and against the Ex- change’s refusal to reinstate the stock ticker service. The district judge, after considering the respective affidavits of the parties, granted summary judgment and a permanent injunction as to the private wire connections, 196 F.Supp. 209, holding that the antitrust laws ap- plied to the Exchange, and that its di- rective and the ensuing compliance by its members constituted a collective re- fusal to continue the wires and was a per s¢ violation of § 1 of the Sherman Act. The judge so held on the basis that, although the Exchange had the power to regulate the conduct of its members in dealing with listed securities, its mem- bers’ relations with nonmembers with vegard to over-the-counter securities were not sufficiently germane to the ful- fillment of its duties of self-regulation under the Securities Exchange Act to warrant its being excused from having to answer for restraints of trade such as occurred here by removal of the pri- vate wires. He left the issues of treble damages and costs to a later trial, With reference to the stock ticker service, the judge held that there were triable issues of fact as to whether the Exchange's ac- tion could be considered to have been the coneerted action of its members and as to whether, if the Exchange was to be r2- garded as having acted by itself, any vio- lation of § 2 of the Sherman Act had oc- curred. He therefore denfed summary judgment as to that aspect of petitioners’ claims, On the Exchange's appeal from the grant of partial summary judgment the United States Court of Appeals for the Second Cirenit reversed over the dissent, of one judge. 802 F.2d 714. The court held that the Securities Exchange Act “gives the Commission and the Exchange disciplinary powers over members of the Exchange with respect to their transac- tions in over-the-counter securities, and that the poliey of the statute requires that the Exchange exercise these powers fully.” Td, at 720. ‘This meant that “the action of the Exchange in bringing about the cancellation of the private wire connections * * * was within the general scope of the authority of the Ex- change as defined by the 1924 Act,” id,, at 736, and dictated a conclusion that “(t]he ‘Exchange is exempt from the restrictions of the Sherman Act because it is exercis- ing a ar power which it is required to exer- cise by the Securities Exchange Act,” id. at 721. The court, however, did not ex- clude the possibility that the Exchange might be liable on some other theory, and remanded the ease for consideration of petitioners’ second and third causes of action ‘This Court granted certiorari. 871 U.S. 808, 88 8.Ct. 26, 9 L.Bd.2d 58. What is before us is only so much of the first ‘cause of action as relates to the collective refusal to continue the private wire eon. nections, since petitioners did not at- tempt to appeal from the denial of sum- mary judgment as to the portion relat. ing to the discontinuance of the stock ticker service. Summary judgment was never sought as to the second and third causes of action, hence those are also not in issue at the present time. . ‘The fundamental issue confronting us is whether the Securities Exchange Act hhas created a duty of exchange self-reg- ulation so pervasive as to constitute an 1252 implied repealer of our antitrust laws, thereby exempting the Exchange from lability in this and similar cases. A [1-8] It is plain, to begin with, that removal of the wires by collective action of the Exchange and its members would, had it occurred in a context free from other federal regulation, constitute a per se violation of § 1 of the Sherman Act. The concerted action of the Exchange and its members here was, in simple terms, a group boycott depriving peti- tioners of a valuable business service which they needed in order to compete effectively as broker-dealers in the over- the-counter securities market. Fashion Originators’ Guild of America v. Fed- eral Trade Comm. 312 U.S. 451, 61 S.Ct. 7103, 85 LEd. 949; Associated Press v. United States, 826 U.S. 1, 65 S.Ct. 1416, 89 LEd. 2013; Klor’s, Inc. v, Brondway- Hale Stores, Ine,, 359 U.S. 207, 79 S.Ct. 705, 8 LEd.2d 741; Radiant ‘Burners, Inc. v, Peoples Gas Light & Coke Co., 348, 364 U.S, 656, 81 8.Cl, 365, 5 LEd.2d 358, Unlike listed securities, there is no cen- tral trading place for securities traded over the counter, ‘The market is estab- lished by traders in the numerous firms all over the country through a process of, constant communication to one another of the latest offers to buy and sell. The private wire connection, which allows ‘communication to occur with flip of a switch, is an essential part of this proc- able market information provided by pri- 5. ‘Tho fact that the consensus underlying the collective action was arrived at when the members bound themselves to comply with Exchange directives upon being Ade Imitted to membership rather than wlien the spocife Ine of Silver's qualifeations frose does not diminish the collective na ture of the action. A Blanket subserip- tion to possible fature restraints doea not execute the restraints wlien they oc. fur, Associcell Press ¥. United States, 326 US. 1, 65 SCt 1410, 89 LBA. 2013, Nor does any excuse derive from the feet tat ‘the collective refusal to deal war nly with reference to the private wires, the member firme remaining willing to 88 SUPREME COURT REPORTER 378 U8, 47 vate wire connections, an over-the-coun- ter dealer is hampered substantially in his crucial endeavor—to buy, whether it be for customers or on his own account, at the lowest quoted price and sell at the highest quoted price. Without member- ship in the network of si loses a significant volume of trading with other members of the network which ‘would come to him as a result of his easy accessibility. These important business advantages were taken away from peti- tioners by the group action of the Ex- change and its members, Such “con- certed refusals by traders to deal with other traders * * * have long been held to be in the forbidden category,” Klor’s, Ine. v. Broadway-Hale Stores, Ine, 359 U.S, at 212, 79 S.Ct, at 709 of restraints which “because of their inherent nature or effect * * * in- Juriously States v, American Tobacco Co., 221 U. S. 106, 179, 81 S.Ct, 632, 55 L.Ed. 663.9 Hence, absent any justification derived from the policy of another statute 349 otherwise, the Exchange acted in viola- tion of the Sherman Act. In this ease, however, the presence of another statu: tory scheme, that of the Securities Ex- change Act of 1934, means that such a conclusion is only the beginning, not the end, of inguiry. R ‘The difficult problem here arises from the need to reconcile pursuit of the an- eal with petitioners for the purchase fant eile of securities, See Bigelow. RKO Radio Pictures, Ine, 827 US. 251, (05 S.Ct. 674. 90 LA. CSE! United States ¥. Paramount Pictures, Ine, 224 US. 121, 167, 68 S.Ct. 015, 034, 92 LEM 320), "A valusble service germane to jonera’ bosiness and. important to heir effective competition with others wan withheld. from them by collective ‘ction. ‘That is enough to create vicla: tion of the Sherman Act. United States ¥. Termine! R. Asis of St. Louis, 224 U.S. 888, 82 S.Ct. S07, 56 LBA. 810; United States v. First National Pictures, Ine, 282 US, 44, 61 S.Ct 45, 75 LEA ‘973. US, $61 SILVER v, NEW YORK STOCK EXCHANGE 1253 ‘ite ne 898 Ce, 10462088) titrust aim of eliminating restraints on ‘competition with the effective operation of a public policy contemplating that se- ‘curities exchanges will engage in self- regulation which may well have ant competitive effects in general and in spe- cific applications. ‘The need for statutory regulation of securities exchanges and the nature of the duty of self-regulation imposed by the Securities Exchange Act are prop- erly understood in the context of a con- sideration of both the economic role play- ed by exchanges and the historical set- ting of the Act. Stock exchanges per- form an important function in the eco- nomic life of this country. ‘They serve, first of all, as an indispensable mecha- nism through which corporate securities can be bought and sold. ‘To corporate en- terprise such a market mechanism is a fundamental element in facilitating the successful marshaling of large aggreza- tions of funds that would otherwise be extremely difficult of access. To the pub- lic the exchanges are an investment channel which promises ready convert ibility of stock holdings into cash. ‘The importance 280 of these functions in dollar terms is vast—in 1962 the New York Stock Exchange, by far the largest of the 14 exchanges which are registered with the Securities and Exchange Com- mission, had $47.4 billion of transactions in stocks, rights, and warrants (a figure which represented 86% of the total dol- lar yolume on registered exchanges). Report of the Special Study of Securities Markets (1963), . IB, p. 6." Moreover, because trading on the exchanges, in a: dition to establishing the price level of Associated Press v. United States, ef, Anderson v. United States, 171 USS. 604, 618-619, 19 S.Ct 50, 65, 43 L. Ea, 200. ‘The report ited inthe toxt is the recent- ly issued frst segment of «study which the Commission wes directed to make by 1061 amendment to the Securities Ex- change Act, § 19(2), 15 U.S.C. (Sopp. TID) § 785(4). Another sot of Sgures re ported by the Special Study lustrates the listed securities, affects securities prices in general, and because such transactions are often regarded as an indicator of our national economic health, the significance of the exchanges in our economy cannot ‘be measured only in terms of the dollar volume of trading. Recognition of the importance of the exchanges role led the ‘House Committee on Interstate and For- eign Commerce to declare in its report preceding the enactment of the Securi- ties Exchange Act of 1984 that “The great exchanges of this country upon which millions of dollars of securities are sold are affected with a publie interest in the same degree as any other great util ity.” HLRRep. No, 1983, 78d Cong., 24 Sess. 15 (1984). The exchanges are by their nature bodies with a limited number of mem- bers, each of which plays a certain role in the carrying out of an exchange’s ac- tivities. ‘The limited-entry feature of exchanges led historically to their being treated by the courts as private clubs, Belton v, Hatch, 109 N.Y. 598, 17 N.E. 225 (1888), and to their being given great latitude by the courts in disciplin- ing errant members, see Westwood and Howard, Self-Government in the Securi ties Business, 17 Law and Contemp. Prob. 618-525 (1952). As exchanges be- came a more and more important element in our Nation's economie and financial system, however, the private-club analo- gy became increasingly inapposite and the ungoverned self-regulation became more and more obviously inadequate, with acceleratingly grave consequences. ‘This impotency ultimately led to the en- actment of the 1934 Act. The House reat importance of corporate securities fas form of private property. As of the fend of 1061, jndivduale hd vet financial favings of about $900,000,000,000, of ‘which direct holdings of corporate secur- amounted to more than half. Tn ad- dition, life iurance companies and pri- vate pension funds held about $93,000, (000,000 in corporate securities, and per- ‘onal trust funds held another $57,000,- (00,000. Special Study, e. 1B, pp. 2-8. 1254 Committee Report summed up the long- developing problem in discussing the general purposes of the bill: “The fundamental fact behind the necessity for this bill is that the leaders of private business, whether because of inertia, pressure of vest cd interests, lack of organization, or otherwise, have not since the war been able to act to protect them- selves by compelling a continuous and orderly program of change in methods and standards of doing business to mateh the degree to which the economic system has it self been constantly changing * *. The repetition in the summer of 1938 of the blindness and abuses of 1929 has convinced a patient public that enlightened self-interest in pri- vate leadership is not sufficiently powerful to effect the necessary changes alone—that private leader- ship seeking to make changes must be given Government help and pro- tection.” H.R.Rep. No. 1383, supra, at 3, It was, therefore, the combination of the enormous growth in the power and im- pact of exchanges in our economy, and their inability and unwillingness to curb abuses which had increasingly grave im- plications because of this growth, that moved Congress to enact the Securities Exchange Act of 1984. S.Rep. No. 792, 3d Cong, 2d Sess. 2-5 (1934); HR. Rep. No. 1383, supra, at 2-5. ‘The pattern of governmental entry, however, was by no means one of total displacement of the exchanges" tradition- al process of self-regulation. ‘The inten- tion rather, as Mr. Justice said, while Chairman of the S.E.C, one of “letting the exchanges take the leadership with Government playing ‘to alter oF supplement the rules of + ¢ 5 fan} exchange * "in Feapect of such matters a8 (1) safeguards fn respect ofthe Snancial responsibility of ‘members and adequate provision against 83 SUPREME COURT REPORTER 873 US, 351 a residual role, Government would keep the shotgun, so to speak, behind the door, loaded, well oiled, cleaned, ready for use Dut with the hope it would never have to be used.” Douglas, Democracy and Finance (Allen ed. 1940), 82, Thus the Senate Committee Report stressed that “the initiative and responsibility for promulgating regulations pertaining to the administration of their ordinary af- fairs remain with the exchanges them- selves. It is only where they fail ade- ‘quately to provide protection to investors that the Commission is authorized to step in and compel them to do so.” S.Rep. No. 792, supra, at 13. The House Com- mittee Report added the hope that the bill would give the exchanges sufficient power to reform themselves without in- tervention by the Commission. H.R.Rep. No. 1883, supra, at 15, See also 2 Loss, Securities Regulation (24 ed. 1961), 1175-1178, 1180-1182. ‘Thus arose the federally mandated du- ty of self-policing by exchanges. In- stead of giving the Commission the pow- er to curb specific instances of abuse, the Act placed in the exchanges a duty to register with the Commission, § 5, 15 U.S.C. § 78e, and decreed that’ registra- tion could not be granted unless the ex- change submitted copies of its rules, § 6 (a) (8), 16 USC. § 78f(a) (8), and un- less such rules were “just and adequate to insure fair dealing and to protect in- vestors,” § 6(d), 15 U.S.C. § 78£(d). The general dimensions of the duty of self- regulation are suggested by § 19(b) of the Act, 15 U.S.C. § 788(b), which gives the Commission power to order changes in exchange rules respecting a number of subjects, which are set forth in the mar- gin? [4] One aspect of the statutorily im- posed duty of self-regulation is the ob- the evasion of Sinencial responsibility through the ure of corporate forme oF special partnerships; (2) the limitation fof probibition of the registration or trad: fas. in any security within a spectfed period after the Issuance oF primary 813 U.S. 356 SILVER v. NEW YORK STOOK EXCHANGE 1255 ‘ite wn 88 8.68.16 (1088) ligation to formulate rules governing the conduct of exchange members. The Act specifically requires that registration ‘cannot be granted “unless the rules of the exchange include provision for the ex- pulsion, suspension, or disciplining of a member for conduct or proceeding incon- sistent with just and equitable principles of trade * * *," § 6(b), 15 USC. § 78{(b). In addition, the general re- quirement of § 6(d) that an exchange’s rules be “just and adequate to insure fair dealing and to protect investors” has obvious relevance to the area of rules regulating the conduct of an exchange’s members. ‘The § 6(b) and § 6(d) duties taken together have the broadest implications in relation to the present problem, for ‘members inevitably trade on the over- istribation thereof; (8) the Ynting oF ‘riking from Iisting of aay seem hours of trading; (3) the manner, ff, and place of soliciting bus'acies fictitious oF numbered accounts; (7) the time end metod of making settlements, papineute, and dallveries and of closing Aecounts; (8) the reporting. of ttn tctions op the exchange and pon ticker Toaintaiued by or with the consont of t ‘exchange, Including the method of porting short sales, stopped sal, eal Of securities of isters in default, bank: ruptey oF receivership, and sles involving ‘other epecial circumstances; (9) the 6x ‘ng of reasonable rates of commicsoa, in- terest, sting, and other charges; (10) rininum units of trading; (11) odd-lot purchases end sales; (22) minimum de- posite on margin accounts; and (13) sim far matters.” Member firms of the New York Stock Brchange accounted for over half of the total dollar volume of over-the-counter Dosiness in fiveal 1961, Special Stody, op. it, supra, ©. IB, pp. 17-18, and trading fn” everthe-countar stocks constitutel 21.6% of the estimated gross income of member firms of the Bxchingo for the fmame period, id, eZ, Table I-12. 9. Of most signfince In this connection ia Art, XIV, § 17, of the Exchange's Con: stitution, ‘which permits it to order a ember to rever any business connection ‘which might eause the interest oF good Tepnte of the Exchange to sufer, and Rules 831-899, which provide various specie regulations governing members* the-counter market in addition to dealing in listed securities and ‘4 such trading in- cexorably brings contact and dealings with nonmember firms which deal in or spe- cialize in over-the-counter securities. It ig no aceident that the Exchange’s Consti- tution and rules are permeated with in- stances of regulation of members’ rela- tionships with nonmembers including nonmember broker-dealers? A mem- ber's purchase of unlisted securities for itself or on behalf of its customer from ‘a boiler-shop operation creates an ob- 288. anger of less to the principe! in the transuction, and sale of securities to ‘a nominember insuMefently capitalized to relations with nonmember corporations fv associations (including broker deal- rs) in whieh they have an ownership cent or with which they are other feomvecte. Pqually important are Ral 440%. probibiting transaction of business rithm bucket shop, aad Hale 435, pro Iibiting paetiipation ia any manipulative ‘operation, ‘The subject of commissions to be collectod from nonmembers is reg blated by Article XV of the Constitution fanl by aumerous rules, Arbiteation in- Yolving nonmembers in dealt with by Are VIIL, 4 1 and 6, of the Constitation. Various other rules probbit the joint use of an office with a nonmember ualess the Exelange approves (Rule 844), the {ng of compensation or gratuities to the ‘employees of ponmembers without their cnployer's conseut (Rule $50), and the paying of certain expenses of ‘noamem- bers (Role 969). Rule 413 permits the ‘Exchange to engage ina “surprise” audit fof any member who docs business with hontmembers, And Art. TIT, § 6, of the Constitution and Toles $55 through 355 Ges with private wire connections and related installations, see note 11, infre. In deposition, the assistant director of the Exchange's Department of Somber ‘Firma deeeribed a boller shop as “usual- iy a physically small operation which fmploys high pressure telepione Inoaship to oversell tothe publle by ‘qventty, and in many cases by quality ‘He snid'ehat tbs kind of firm, as well as ‘bucket shops, inadequately caplealized firma, and. rms which might misrepre- tent or withhold material facts from eu 1256 protect customers’ rights creates similar sks. In addition to the potential finan- cial injury to the investing public and Exchange members that is inherent in ‘these transactions as well as in dealings with nonmembers who are unrelisble for any other reason, all such intercourse carries with it the gravest danger of ‘engendering in the public a loss of con- fidence in the Exchange and its members, ‘a kind of damage which can significantly impair fulfillment of the Exchange's function in our economy. Rules which regulate Exchange members’ doing of business with nonmembers in the over- the-counter market are therefore very ‘much pertinent to the aims of self-romu- lation under the 1934 Act. ‘Transactions ‘with nonmembers under the efreumstane- es mentioned can only be described as “inconsistent with just and equitable principles of trade,” and rules regulating such dealing are indeed “just and ade- ‘quate to insure fair dealing and to pro- tect investors.” ‘The Exchange's constitutional provi sion and rules relating to private wire connections # are unquestionably part of tomers, was among those which the Ex- change secks to prevent from having the ‘se of its facilites. that the Exchange have power to approve or disapprove any application for ticker tervice tn any non. rember, oF for wire, wireless, or other ‘connection between ‘any ofice of ant rember of the Exchange, member frm for member corporation and. sy non: member, snd may requier the dircontinc ance of any such service or connection, Tle 355 provides, "(a) No member or momber ergtnization shall ertabish or maintain ‘nny wire connestion, private radio, television or wireless system be- toreen his or its oflces and the oflce of any non-member, oF permit any private radio or television system between bis its offices, without prior consent of the Exchange. (b) Bveey nonmember will, be required to execute @ private. wits 88 SUPREME COURT REPORTER 378 U.S, 355 this fulfillment of the § 6(b) and § 6(4) duties, for such wires between members and nonmembers facilitate trading in and exchange of information about un- listed securities, and such contact with fan unreliable nonmember not only may further his business undesirably, but may injure the member or the member's cus- tomer on whose behslf the contact is made and ultimately imperil the future status of the Exchange by sapping public confidence. In light of the important role of exchanges in our economy and the 1934 Act’s design of giving the exchanges fa major part in curbing abuses by ob- ligating them to regulate themselves, it appears conclusively—contrary to the District Court's conclusion—that the rules applied in the present case are ger- mane to performance of the duty, im- lied by § 6(b) and § 6(4), to have rules governing members’ transactions and re- Jationships with nonmembers. The Ex- change's enforcement of such rules in- evitably affects the nonmember involved, often (as here) far more seriously than it affects the members in question. The sweeping of the nonmembers into the contract in form prescribed by the Ex- change to be filed with i, ualese ‘tract in alrendy on Sle with the Exchange {@) Notieation regarding a private ‘means of communication with a noa-mem- iment of Member Birme. ‘This notion. tion, by a member or allied member, may be in form supplied by the Exchange or fn Ietter form, and shall include the sential facts concerning the non-member find the means of communication. (0) Each member or member orgunization fall submit annually to the Department ‘of Member Firms list of all non-mem: bers with whom private menns of com- fmuinication are maintained («) ‘The Ex ‘chanze may require at any te that any incens of comminiation be discontiniel.” Tole $50, insofar as relevant, provides, ‘the Exchange may require at any ti the discontinunnee of any meant of com- Iuinionton whatsoever which haa a ter- ‘nus in the office of a member oF me Der organization” 373 US. 358 oi currents of the Exchange's process of self-regulation is therefore unavoidable; the ease cannot be disposed of by holding as the oor district judge did that the substan- tive act of regulation engaged in here vwas outside the boundaries of the public policy established by the Securities Ex- change Act of 1934, ©. [5] But, it does not follow that the ease can be disposed of, as the Court of Appeals did, by holding that since the Exchange has a general power to adopt rules governing its members’ relations with nonmembers, particular applica- tions of such rules are therefore outside the purview of the antitrust laws. Con- trary to the conclusions reached by the courts below, the proper approach to this case, in our view, is an analysis which reconciles the operation of both statutory schemes with one another rather than holding one completely ousted. [6,7] ‘The Securities Exchange Act contains no express exemption from the antitrust laws or, for that matter, from any other statute, This means that any repealer of the antitrust laws must be discerned as a matter of implication, and “i]t is a cardinal principle of con- struction that repeals by implication are not favored.” United States v. Borden Co,, 308 U.S. 188, 198, 60 S.Ct. 182, 188, 84 LEd. 181; see Georgia v. Pennsyl- vania R. Co., 324 US. 439, 456-457, 65 S.Ct. 716, 725-726, 89 LEd, 1051; Cali fornia v. Federal Power Comm., 369 US. 482, 485, 82 S.Ct. 901, 908, 8 L-Ed.24 54. Repeal is to be regarded as implied only if necessary to make the Securities Exchange Act work, and even then only to the minimum extent necessary. This 12 Were there Commission jariediction and sensing Jadeial review for serainy of a partialar exchange ruling, as there Ie lander the 1035 Maloney Act amendment to the Exchange Act to examine dscipli- rary action by a registered. securitien Association (Ley, by the NASD), 4 HACE), ISAM), 25(a), 15 USC. $5 Bo-B(G), 780-B(h), Ty(a); wee RH mscnws SILVER v. NEW YORK STOOK EXCHANGE 8 8.ce 126 1068) 1257 is the guiding principle to reconciliation of the two statutory schemes. [8-10] Although the Act gives to the Securities and Exchange Commission the Power to request exchanges to make changes in their rules, § 19(b), 15 U.S.C. § 78s(b), and impliedly, therefore, to disapprove any rules adopted by an ex- change, see also § 6(a) (4), 15 U.S.C. § ‘T8f(a) (4), it does not give’ the Com sion jurisdiction to review particular in- stances of enforcement of exchange rules. See 2 Loss, op. cit, supra, at 1178; Westwood and 388 ‘Howard, supra, 17 Law & Contemp. Prob., at 525. This aspect of the statute, for one thing, obviates any need to consider whether petitioners were required to resort to the Commis- sion for relief before coming into court. Compare Georgia v. Pennsylvania R. C 824 ULS., at 455, 65 S.Ct. at 725. More- over, the Commission’s lack of jurisdic- tion ‘over particular applications of ex- change rules means that the question of antitrust exemption does not involve any problem of conflict or coextensive- ness of coverage with the agency's regu- latory power. See Georgia v. Pennsyl- vania R. Co, supra; United States v. Radio Corp. of America, 358 U.S. 334, 79 S.Ct, 457, 8 L.Bd.2d 354; California vy. Federal Power Comm, supra; Pan American World Airways, Inc. v. United States, 871 U.S. 296, 88 S.Ct. 476, 9 L.Ed. 2d 326. The issue is only that of the extent to which the character and ob- Jectives of the duty of exchange self- regulation contemplated by the Securities Exchange Act are incompatible with the maintenance of an antitrust action. Compare Maryland & Virginia Milk Pro- ducers Ass'n v. United States, 362 US. 458, 80 S.Ct. 847, 4 LEd.2d 880. Johnson & Co. v. Securitien & Exchange ‘Comm, 198 F.2d 690 (C.A2A Cir-1952), ert, denied, 244 US, 855, 18 S.Ct. 04, F Lekd, O64, n different case would arlae foncerning exemption from the operation ot laws designed to prevent anticompetl- tive nctiley, an isbue we do not decide today. 1258 [11,12] The absence of Commission Jurisdiction, besides defining the limits ‘of the inquiry, contributes to its solu- tion. There is nothing built into the regulatory scheme which performs the antitrust function of insuring that an exchange will not in some cases apply its rules s0 as to do injury to competi- tion which cannot be justified as further- ing legitimate self-regulative ends. By providing no agency check on exchange behavior in particular cases, Congress left the regulatory scheme subject to “the influences of * * * [improper collective action] over which the Commis- sion has no authority but which if proven to exist can only hinder the Commission in the tasks with which it is confronted,” Georgia v. Pennsylvania R. Co. 324 USS, at 460, 65 S.Ct. at 727; See Unit- ed States v. Borden Co, 308 US, at 200, 60 S.Ct, at 189; Maryland & Vir- ginia Milk Producers Ass'n v. United States, 862 U.S., at 465-466, 80 S.Ct. at 852-853. Enforcement of exchange rules, particularly those of the New York Stock Exchange with its immense economic power, may well, in given cas- es, result in competitive injury to an is- suer, a nonmember broker-dealer, or another when the imposition of such injury is not within the scope of the great purposes of the Securities Ex- change Act. Such unjustified self-regu- latory activity can only diminish public respect for and confidence in the in- tegrity and efficacy of the exchange mech- anism. Some form of review of ex- change self-policing, whether by admin- istrative agency or by the courts, is therefore not at all incompatible with the fulfilment of the aims of the Securities Exchange Act. Only this year 8, E. C. Chairman Cary observed that “some gov- ernment oversight is warranted, indeed necessary, to insure that action in the 13, Although the recently insued frst seg: rent of the Teport of the Special Study of Securities Markets is more critical of Situations in he over-the-counter. mar Ket and with reference to exchanges oth fer than the rerpondest, it does polat out 83 SUPREME COURT REPORTER 373 U.S. 358 name of self-regulation is neither dis- criminatory nor capricious.” Cary, Self- Regulation in the Securities Industry, 49 A.B.AJ. 244, 246 (1963).3 Since the an- titrust laws serve, among other things, to protect competitive freedom, i. e., the freedom of individual business units to compete unhindered by the 360) group action of others, it follows that the antitrust laws are’ peculiarly appropriate 25 a check upon anticompetitive acts of ex- changes which conflict with their duty to keep their operations and those of the members honest and viable. Applicabil- ity of the antitrust laws, therefore, rests on the need for vindication of thé positive aim of insuring competitive free- dom. Denial of their applicability would defeat the congressional policy reflected in the antitrust laws without serving the policy of the Securities Exchange Act. Should review of exchange self-regula- tion be provided through a vehicle other than the antitrust laws, a different case as to antitrust exemption would be pre- sented. See note 12, supra, (13,14) Yet it is only frank to ac- knowledge that the absence of power in the Commission to review particular ex- change exercises of self-regulation does create problems for the Exchange. The entire public policy of self-regulation, be- ginning with the idea that the Exchange may set up barriers to membership, con- ‘templates that the Exchange will engage in restraints of trade which might well be unreasonable absent sanction by the Securities Exchange Act. Without the oversight of the Commission to elabor- ate from time to time on the propriety of various acts of self-regulation, the Ex- change is left without guidance and with- ‘out warning as to what regulative action ‘would be viewed as excessive by an a ‘trust court possessing power to proceed that improper selling practices have oc- curred among member firms of respond fent.c. THB, pp. 178-179, 183-184, and les to govern selling practices of s6- ccarites denlers, id, p. 186. 878 U.S. 862 SILVER v, NEW YORK STOCK EXCHANGE 1259 ‘ites 3 8.ce 126 106) based upon the considerations enumer- ated in the preceding paragraphs. But, under the aegis of the rule of reason, traditional antitrust concepts are flexible enough to permit the Exchange sufficient breathing space within which to carry out the mandate of the Securities Ex- change Act. See United States v. Termi- nal R. Ass'n of St. Louis, 224 U.S. 383, 394-295, 82 S.Ct. 607, 509-510, 56 L.Ed. 810; Board of Trade of City of Chicago v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 243, 62 L.Ed, 683. Although, as we have seen, the statutory scheme of that Act is not sufficiently pervasive to create a total exemption from the anti- trust laws, compare Hale and Hale, Com- petition or Control VI: Application of Antitrust Laws to Regulated Industries, 111 U. of Pa.L.Rev. 46, 48, 57-59 (1962), it is also true that particular instances of exchange self-regulation which fall within the scope and purposes of the Se- curities Exchange Act may be regarded as justified in answer to the assertion of an antitrust claim. m. The final question here is, therefore, whether the act of self-regulation in this cease was so justified. ‘The answer to that question is that it was not, because the collective refusal to continue the private wires occurred under totally unjustifiable circumstances. Notwithstanding their prompt and repeated requests, petition- ‘ers were not informed of the charges un- derlying the decision to invoke the Ex- change rules and were not afforded an appropriate opportunity to explain or refute the charges against them. [15] Given the principle that ex- change self-regulation is to be rezarded as justified in response to antitrust charg- ¢s only to the extent necessary to protect the achievement of the aims of the Secu- rrities Exchange Act, it is clear that no justification can be offered for self-regu- lation conducted without provision for some method of telling a protesting non- 14, ‘The Bxchange argues that total disco. ‘are of the reason for ite action and of ‘member why a rule is being invoked so as to harm him and allowing him to reply in explanation of his position. No policy reflected in the Securities Exchange Act is, to begin with, served by denial of no- tice and an opportunity for hearing. In- deed, the aims of the statutory scheme of self-policing—to protect investors and promote fair dealing—are defeated when fan exchange exercises its tremendous economic power without explaining its basis for acting, for the absence of an obligation to give some form of notice and, if timely requested, a hearing ere- ates a great danger of perpetration of injury that will damage public confidence in the exchanges. The requirement 200 of such a hearing will, by contrast, help in effectuating antitrust policies by dis- couraging anticompetitive applications of exchange rules which are not justifiable as within the scope of the purposes of the Securities Exchange Act. In addition to the general impetus to refrain from mak- ing unsupportable accusations that is present when it is required that the basis of charges be laid bare, the explana- tion or rebuttal offered by the nonmem- ber will in many instances dissipate the force of the ex parte information upon which an exchange proposes to act. ‘The duty to explain and afford an opportunity to answer will, therefore, be of extremely beneficial effect in keeping exchange ac- tion from straying into areas wholly foreign to the purposes of the Securities Exehange Act. And, given the possibili- ty of antitrust liability for anti-compe- titive acts of self-regulation which fall too far outside the scope of the Exchange Act, the utilization of a notice and hear- ing procedure with its inherent cheek upon unauthorized exchange action will diminish rather than enlarge the likeli- hood that such liability will be incurred and hence will not interfere with the Exchange's ability to engage efficaciously in legitimate substantive self-regul: tion. Provision of such a hearing will, ‘the sources of its information will subject i ead ite informants to a Hak of boing 1260 moreover, contribute to the effective fune- tioning of the antitrust court, which would be severely impeded in providing the review of exchange action which we deem essential if the exchange could ob- scure rather than illuminate the circum- stances under which it has acted. Hence the affording of procedural safeguards not only will substantively encourage the lessening of anticompetitive behavior out- lawed by the Sherman Act but will allow the antitrust court to perform its fune- tion effectively.29 fyed for defamation Ia many instances. ‘This risk, however, is properly met by the flexibility inherent fa the law of de famation inthe coneept of the condi- tional or qualifed privilege. 1 Tiaeper fant James, The Law of Torts (1956), 48 521, 625, 520, especally § 526, at 442 3. In addition, oven if a particular communication of information to the Bx- change shovld fall outside the scope of fuch a prvilege, the Exchange can pro- tect itself and its Informant from expan: fon of damage liability by confining te hearing, unless otherwise requested by the aggrieved nonmember, to the partes to the tispute and the necessary witness: 3, 9 a8 to Tinie the area of dissemina- tion of the defamatory matter. See 1 Harper and James, op. eit, supra, § 5.0, far 400. "Similarly, any concern that out holding exposes the Exchange to exces: sive Tabilts for mast enforcement of its ales accotplished without a hearing Sqnores the prestmale applieabiley of familiay priueples of waiver, laches, ani estoppel "to bar relief to a nonmember tho faved to make timely and appropri ate protest to the Bsehange, 15, ‘The alfording of nrocedaral safequarila will not bueden the New York Stock Exe Shange: wotiee and Wearing are already frutranteed by its Constitution, Art, XIV, $14, to any member accuse! of violating ite rules, ‘The existence of these gnare antece goes far toward dispelling frare ine provision of a heseing to nonmer Dera woul Interfere sisniGeanthy with the neal for timely Exelange action, for It fan surely be assumed thot prompt. ae: tion Ia az much required to. deal with member wrongdoing as with that of nonmember. "We have ao dovbt, more: over, that provision of a hearing to protesting nonmember ean, when eireum= ances require, be accomplished expe ously enough to prevent injary to in 89 SUPREME COURT REPORTER 973 US. 362 [16-22] Our decision today recog- nizes that the action here taken by the Exchange would clearly be in violation of the Sherman Act unless justified by reference to the purposes of the Securi- ties Exchange Act, and holds that that statute affords no justification for anti- ‘competitive collective action taken with- out according fair procedures. Con- gress in effecting a scheme of self-regu- lation designed to insure fair dealing can- not be thought to have sanctioned and protected self-regulative activity when vestors. Indeed, Sf the basis for Invoce- on of an Exchange rule is also a viola tion ‘of the Securitiea Act of 1933, the Securities Dxchango Act of 1934, oF the Commission's rules and regulatious wader fither statute, the Commission can come ‘to the aid of the Bxclinge by obtaining preliminary or permanent” injunction for restraining order against euch practice in the appropriate Ualted States District Court. Swrritoe Act of 1003, § 20(b). 35 USC. § Tre(b); Securities Brchange Act of 164, § 21(6), 15 USC. § TBale) Tee signigcant, however, that the Com: nission’s power to obtain restraint of particular Violations is conned to tradi- onal Julieta! channela with. the ate roars implied thereby, and that when the Commission, pursuant to the powers ‘conferred on it by Congress in the Malo- ‘ney Act of 1038, wishes to resort to the more drastic eauction of suspending or evoking the membership in the NASD of a wrongdoing over-the-counter dealer, It may only do s0 "after appropriate no- tice nnd opportunity for hearing * * *" HSA), 15 USC. § 780-2(0. 18. Te may be assumed that the Securiten ‘and Exchange Commission would. have hal the power, under £ 19(b) of the Ex- change Act, 15 U.S.C. § 78s(b), pp. 1254- 3255. 1257 & note 7, supra, to direct the Exchange to adopt a general rale providing ‘hearing and attendant procedures to nos: rembers. "However, any rule that might be ndopted by the Commission would, to be consonant with the antitrust laws, lave to provide as minimum the procedaral eafe: foands which thoee lame make imperative In cases like this. Absent Commission adoption of a rule requiring fair proce: Gore, and in ight of both the utllty of fsich a role an en antitrast matter and ite compacbiliey with sovuritlea-regulation Principles, see p. 1259, supra, no incom. Datibiity with the Commission's power 873 U.S. 366 SILVER v, NEW YORK STOCK EXCHANGE 1261 Cites 8 8.ce 136 1068) carried out in a fundamentally unfai manner. The point is not that the antitrust laws impose the requirement of notice and a hearing here, but rather that, in acting without according peti- tioners these safeguards in response to their request, the Exchange has plainly exceeded the scope of its authority under the Securities Exchange Act to engage in self-regulation and therefore has not, ‘even reached the threshold of justifica- tion under that statute for what would otherwise be an antitrust violation. Since it is perfectly clear that the Ex- Inheres in announcement by an antitrast court of the rule, Compare Colorado ‘Anti-Diserimiaation Comm. ¥. Continen- tal Air Lines, Inc, 972 US. 714, 720 ‘724, 83 SCL 1022, 1028-1027, 17. ‘The basic matare of the sights which we hhold to be required under the antitrast laws in the eireumstances of today’s de-

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