Philly exchange suit nears settlement

Settlement talks began last week in a lawsuit involving Wall Street firms and former seat holders of the Philadelphia Stock Exchange, according to the New York Post.

Settlement talks began last week in a lawsuit involving several large Wall Street firms and former seat holders of the Philadelphia Stock Exchange, according to the New York Post.
The class action alleges that a deal to sell the exchange to Archipelago for $50 million in 2004 was rejected by management before seat holders were consulted because exchange chief executive Meyer “Sandy” Frucher wanted to hold out for more equity, according to unnamed sources cited in a New York Post report.
The case also involves Merrill Lynch & Co. Inc., hedge fund Citadel Investment Group LLC of Chicago and a several former politicians who serve on the exchange’s board.
The suit said that the exchange gave up nearly 90% of its equity when it accepted a capital infusion from Merrill, Citadel, and Zurich, Switzerland-based UBS AG and Credit Suisse Group.
Each bank had agreed to invest or direct $7.5 million worth of order flow into the exchange, according to the Post.
In return, the suit cites an analysis by law firm Keefe, Bruyette & Woods that values each $7.5 million stake as now being worth $84.2 million, said the report.