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The Philadelphia Stock Exchange (PHLX) announced today that the parties in Ginsburg v. Philadelphia Stock Exchange, et al., have filed with the court within the last hour a Stipulation of Settlement that memorializes the previously announced settlement agreement. The settlement remains subject to approval by the Delaware Court of Chancery.
The lawsuit, brought on behalf of a class of PHLX shareholders, alleged that the members of PHLX’s Board of Governors breached their fiduciary duties, and that PHLX’s strategic investors aided and abetted those alleged breaches of fiduciary duties, in connection with strategic transactions that PHLX announced in June and August 2005. PHLX and the strategic investors have vigorously denied any wrongdoing and the settlement does not constitute an admission of any wrongdoing.
Pursuant to the Stipulation of Settlement:- the strategic investors each shall contribute 14% of their respective equity interests in PHLX into a settlement fund;
- PHLX shall cause certain of its Director and Officer insurers to pay $14 million into the settlement fund;
- PHLX shall pay $3.1 million into the settlement fund;
- PHLX Chairman and CEO Meyer “Sandy” Frucher shall cancel his interest in 14% of the PHLX restricted stock units awarded to him; and
- future issuances of stock by PHLX, if any, will dilute all then-existing shareholders equally on a pro rata basis with respect to their shares (except to the extent any of the strategic investors exercise their contractual preemptive rights).
In exchange for the settlement consideration, the defendants shall be released from all claims arising from and relating to the subject matter of the lawsuit. If the court approves the terms of the settlement, the proceeds of the settlement will be distributed in accordance with a plan to be proposed by class counsel subject to court approval.
PHLX shareholders who may be eligible to participate in the settlement will receive by mail a notice advising them of the full terms and conditions of the settlement. Any shareholder inquiries concerning the terms of the settlement should be directed to class counsel: Lawrence Deutsch and Robin Switzenbaum, Berger & Montague, P.C., 1622 Locust Street, Philadelphia, PA 19103, (800) 424-6690.
Frucher said that PHLX is pleased to have the litigation resolved. “With this settlement behind us, the Exchange will continue to vigorously pursue strategic opportunities while building on its record-setting growth in the options market.”
The PHLX is represented in the litigation by Ballard Spahr Andrews & Ingersoll, LLP, Willkie Farr & Gallagher, LLP, and Morris, Nichols, Arsht & Tunnell, LLP.
