Looks like Discovery is over according to the court docs. Any idea when the case goes to settlement or trial? Has factset disclosed the case yet or do they still think it‘s immaterial.
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Might as well a neutral source:
Please resend analysis of factset cusip law suit potential costs
ChatGPT said:Here is a detailed summary and analysis of the legal risks and potential costs for FactSet Research Systems, Inc. (FactSet) stemming from the ongoing litigation related to CUSIP Global Services/the CUSIP‐licensing business. This is not legal advice, but rather a breakdown of publicly available information aimed at helping assess the magnitude of potential exposure.
Background of the litigation
FactSet acquired CUSIP Global Services (CGS) from S&P Global Inc. in March 2022 for approximately US$1.925 billion. FactSet Investor+2Integrity Research+2
A class‐action antitrust and copyright‐based suit was filed in March 2022 (in the Southern District of New York) by broker-dealer Dinosaur Financial Group LLC and Swiss Life Investment Management (and another by Hildene Capital Management, LLC) against CGS, S&P, the American Bankers Association (ABA) and FactSet. ClassAction.org+1
The complaint alleges that the defendants conspired to maintain monopoly power in the market for financial‐instrument identifiers (CUSIPs) and charged “hefty licensing fees” based on “bogus and malleable” copyright claims. WatersTechnology.com+1
Key legal theories include violations of Sections 1 and 2 of the Sherman Act (antitrust), the Clayton Act, the US Copyright Act, and certain state consumer‐protection statutes. WatersTechnology.com+1
In July 2023, the court denied in part a motion to dismiss the complaint—meaning parts of the case (notably the Section 2 Sherman Act claims) will proceed to discovery. wmd-law.com+2WatersTechnology.com+2
The plaintiffs estimate that the overcharge paid by financial‐institution users could exceed “more than US$100 million per year”. ASPPA+1
Key risk-factors for FactSet
Scale of the underlying business: Since FactSet bought CGS for ~$1.9 billion, the CUSIP business is strategically large for them. Therefore a major adverse ruling could threaten more than just a small reserve.
Potential class size: Because the suit is structured as a class action for “all persons or entities … who paid a license fee to S&P or FactSet pursuant to CGS’s subscription agreement …” the exposure could be very broad and accumulate over many years. WatersTechnology.com+1
Nature of claims: The antitrust (monopoly) claim is especially risky because Section 2 Sherman Act violation can lead to treble damages (three times the actual damages) and significant injunctive relief (e.g., forced change in pricing/licensing model). If found liable, the company may also face changes in business model beyond just damages.
Discovery risk: With the case moving to discovery, the risk of material adverse findings increases (e.g., internal documents showing behavior consistent with allegation of “lock‐out” or “monopoly hold‐up”). wmd-law.com+1
Reputational/regulatory risk: Given that CUSIPs are critical industry infrastructure (almost every U.S. stock and bond uses them) and regulatory bodies (e.g., the European Commission previously investigated this business for dominance) are attentive. Integrity Research+1
Deal‐acquisition risk: Because FactSet paid ~US$1.9 billion for the business, if the licensing regime is overturned or forced to change significantly, the acquired asset may not generate expected returns, thereby affecting goodwill/impairment risk.
Estimate of potential costs
While no public estimate by the defendants has been disclosed (at least in my search), we can work through a “ballpark” based on available commentary and analogues:
The plaintiffs’ assertion: “more than US$100 million per year” of overcharges. ASPPA+1
If we assume that over a class period of, say, 5 years (or maybe more) this accumulates: then gross overcharge might be US$500 million+.
If liability is found and treble damages apply, this becomes US$1.5 billion+.
Add in interest, attorneys’ fees (class actions can generate large legal‐expenses), plus injunctive relief costs (modifying business model, refunding/licensing restructuring) → the total could easily be in the billion‐dollar range.
On top of direct liability, there is the risk of business disruption: e.g., forced changes to licensing, refunding customers, reputational damage, potential regulatory intervention or oversight.
Given the acquisition price of ~$1.9 billion, even a damage and settlement/reserves in the high hundreds of millions could materially affect FactSet’s financials (especially if it has to recognize impairment or large reserves).
What management/disclosure might need to consider
FactSet should evaluate whether the loss is probable and estimable under accounting standards for litigation (e.g., ASC 450 for US GAAP). If the range of possible losses is “reasonably possible” but not “probable”, then disclosure may be required rather than reserve.
They should monitor developments (e.g., class certification decisions, motion to dismiss outcomes, discovery findings) because these can shift probabilities and estimates.
They should assess whether the acquisition’s goodwill relating to CGS needs impairment testing given this litigation risk.
They may need to consider restructuring the licensing model proactively if litigation risk appears to be increasing—to mitigate ongoing risk and business model disruption.
Litigation risk should be factored into investor communications: analysts will likely interrogate how this risk is being managed, and what scenarios (e.g., low, medium, high) the company is modeling.
@w0 Yes, very sensitive and spamming downvotes. Probably ELT. Must have struck a nerve.
Someone is sensitive
You are too curious 🤨 , your question means only one thing , you re not from factset so go stalk somewhere else