PHILADELPHIA- SEPT. 18, 2006 - 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.
