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On September 15, 2006, the Pennsylvania Supreme Court denied the request of Pennmont Securities and its principal, Joseph Carapico, asking that the Court review and overturn the award of summary judgment to defendants Philadelphia Stock Exchange, Inc. and current and former members of its board of governors. The Court’s decision effectively ends this longstanding lawsuit.
Mr. Carapico sued the Exchange in November 1998, complaining of supposed mismanagement and self-dealing by the Exchange board and management dating from the mid-1990s and allegedly continuing through the date summary judgment was awarded in late 2004. Mr. Carapico also asserted that the 2004 demutualization of the Exchange, i.e., its conversion from a membership structure to a stock structure, was unlawful.
During the course of the extensive litigation and discovery, Mr. Carapico unsuccessfully sought to enjoin the Exchange from allowing owners and members to vote in the Fall of 2003 on the question of demutualization. After owners and members overwhelmingly approved demutualization by more than a 5:1 margin, and after it was subsequently approved by the Securities and Exchange Commission, the Exchange did demutualize in January 2004. Nonetheless, Mr. Carapico continued to press his suit to unwind demutualization, to remove management, and to obtain money damages.
The Supreme Court’s order let stand a ruling by the Pennsylvania Superior Court affirming the trial court’s grant of summary judgment. The Superior Court also affirmed the trial judge’s refusal to allow Mr. Carapico to set forth a host of new allegations in a new complaint, on the grounds that the new allegations presented no meritorious basis to proceed against the Exchange and its Board.
The Philadelphia Stock Exchange was founded in 1790. The PHLX trades 1,943 stocks, 2,231 equity options, 16 sectors index options, and currency options and futures. For more information about the PHLX and its products, visit www.phlx.com.
