WILMINGTON, Del. (CN) – The Delaware Supreme Court rejected shareholders’ challenge to a $17.1 million settlement with the Philadelphia Stock Exchange after the exchange sold 90 percent of its equity to six institutional investors to avoid bankruptcy.
Shareholders claimed the settlement was flawed, in part because it did not establish an allocation plan for the settlement proceeds. In addition to the $17.1 million, the settlement gave back shareholders more than 55,000 shares, representing about 14 percent of the shares bought by the “strategic investors.”
The PHLX urged the court to approve the settlement quickly, since the Nasdaq Stock Market agreed in November 2007 to purchase the PHLX for $652 million on the condition that the final settlement closed by July 31, 2008.
The court chancellor responded by approving the settlement as a whole, without considering any allocation plan.
The high court held that the Court of Chancery did not violate plaintiffs’ due-process rights in certifying the class or refusing to divide the class into subclasses. Justice Jacobs said the chancellor “committed no legal error or abuse of discretion in approving the settlement.”