Antitrust Lawsuit Alleges S&P, FactSet ‘Conspired’ to Eliminate Competition in Financial Instrument ID Number Market

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A proposed class action alleges CUSIP Global Services, S&P Global, FactSet Research Systems and the American Bankers Association have conspired for decades to eliminate competition for the use of CUSIPs, an identification number system for securities. 

According to the 31-page complaint, a CUSIP—Committee on Uniform Securities Identification Procedures—represents a nine-digit functional handle used to identify particular financial instruments in North America. Each CUSIP facilitates the processing, clearing and settlement of trades of certain instruments, and banks, investment funds, public employee pension funds, and other financial institutions in the U.S. and abroad rely on CUSIPs to operate, the suit explains. Per the case, financial institutions bought physical books containing in-use CUSIP numbers until the 1980s, when data vendors began providing the identifiers directly and depriving S&P and CUSIP Global Services of their alleged “monopoly power” in the market.

The lawsuit alleges that S&P Global and CUSIP Global Services (CGS), who was recently purchased by FactSet, have attempted to forestall their loss of control over CUSIP use among financial institutions by inserting into their agreements with data vendors a clause that prohibits the vendors from providing CUSIPs to any financial institution who did not sign a “license agreement” directly with S&P. This license agreement, the case alleges, in turn prohibits financial institutions from using the CUSIPs they received from data vendors in any way not specifically allowed by S&P and CGS. Moreover, the apparent contract, which the defendants call a “licensing agreement,” requires financial institutions to pay “hefty” license fees to S&P based on “bogus and malleable” claims that a copyright owned by the American Bankers Association (ABA) allowed them to impose these restrictions. 

“None of S&P, CGS, or the ABA had the legal right, and [current CUSIP Global Services parent] FactSet does not have the legal right, to control the use of CUSIPs by Financial Institutions, and therefore had and have no legal basis to impose either the ‘license agreements’ or the ‘license fees’ on Financial Institutions,” the antitrust lawsuit alleges. 

According to the suit, the CUSIP market is not competitive given S&P, FactSet, CGS and the ABA have closed the door on all actual and potential competitors, which in turn has allowed the defendants to impose the apparent “license”-based restrictions and fees on financial institutions. 

The lawsuit looks to represent all persons or entities, other than data vendors, that directly paid a “license fee” to S&P Global or FactSet pursuant to a Subscription Agreement and the Use of Services Statement at any time within the last four years and until the alleged anticompetitive conduct ends.

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