New York, NY: (Sep-05-07) A class action shareholders lawsuit was brought against the Philadelphia Stock Exchange (PHLX), over the sale of the exchange. The class action lawsuit was filed in 2006 against the exchange and its strategic investors by former seat holder Chuck Ginsberg. It alleged that the exchange's board struck a deal with six Wall Street firms that would result in 90% of the exchange's equity being transferred from shareholders to the investors and board members. The firms named in the lawsuit are Merrill Lynch, Pierce Fenner & Smith, Morgan Stanley, UBS Securities, Citadel Derivatives Group, Citigroup Financial Products, and Credit Suisse First Boston Next Fund.
In a settlement reached, Philadelphia Stock Exchange shareholders stand to receive up to $80 million. The settlement includes a return of 14% of the shares held by the six firms to a class of PHLX shareholders and the cancellation of 14% of the restricted stock issued to exchange. Sources stated that the settlement, which also includes $17.1 million in cash, is valued at between $67 million and $80 million, depending on the market value of the PHLX. The parties agreed to settle in June 2007 but the amount was not disclosed at the time. [REUTERS: PHLX SECURITIES]
