Several months after some of the world’s major stock exchanges secured a win in a high-frequency trading (HFT) lawsuit, they were dealt a heavy blow as they tried to sought to vacate earlier Court decisions in this case.

On July 29, 2022, Judge Jesse M. Furman of the New York Southern District Court nixed a motion by Bats Global Markets, Inc., Chicago Stock Exchange, Inc., Direct Edge ECN, L.L.C., NYSE Arca, Inc., New York Stock Exchange, L.L.C. To vacate earlier decisions.

In this lawsuit, a collection of institutional investors allege that seven stock exchanges violated Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b). Specifically, Plaintiffs allege that the Exchanges sold certain products and services to HFT firms — thereby purportedly giving the HFT firms an advantage over Plaintiffs and the investing public — and failed to fully disclose the effects of these products and services to the market.

In March 2022, the Court sided with the Exchanges and terminated the case.

The Exchanges then moved, by letter, for an order vacating certain portions of a Court’s 2015 Opinion and Order addressing the merits of Plaintiffs’ claims and the Court’s 2019 Opinion and Order denying the Exchanges’ renewed motion to dismiss. In support of that request, they rely on a handful of decisions — all from outside the Second Circuit — holding that, “when a federal court has never obtained jurisdiction over a case, such as when the plaintiff(s) lack standing, the proper disposition is to vacate all prior decisions made in the case.”

In the Court’s view, these cases do not compel the relief sought by the Exchanges.

The question presented by the Exchanges’ request is whether a court should vacate a prior decision addressing the merits when, as here, the court found, at the motion-to-dismiss stage, that the plaintiffs had standing, but later found, based on the higher burden applicable at summary judgment, that they did not. The out of-Circuit cases cited by the Exchanges do not speak to that question because none involved that procedural history, the Judge said.

And the Exchanges do not seek to vacate a judgment; instead, they seek to vacate interlocutory decisions of a district court, which would presumably serve merely as persuasive authority in any future litigation. The Exchanges fail to explain how they would be “prejudiced by” those decisions remaining on the books in the same way that a party could be prejudiced by an unreviewed judgment.

In short, the Judge said, the Exchanges fail to persuade the Court that vacatur of its prior decisions is appropriate, let alone required. Accordingly, the Exchanges’ request was denied without prejudice to renewal in the event that the Exchanges can support it with authority more directly on point or can otherwise persuade the Court that the request is appropriate.