Sale Of Philadelphia Stock Exchange|Was ‘Theft By Deception,’ Class Claims

      PHILADELPHIA (CN) – Susquehanna International Group committed “theft by deception” in buying the Philadelphia Stock Exchange for far below its true value, a former PHLX seatholder claims in a class action securities complaint.

     Lewis Levin claims the 505 seats on the PHLX sold, if they were sold at all, for more than $300,000 apiece in 1998 and 1999. The PHLX demutualized in January 2004. Levin claims that in April 2005, PHLX directors rejected an offer of $50 million for the exchange, which would have valued each seat at less than $100,000. And he claims that in August 2005, PHLX directors sold 98.4% of the exchange to six firms for only $33.75 million. Simultaneously with this announcement, the board of the PHLX “announced that the PHLX would make a self tender to retire Class A PHLX stock at $90,000 per 100 shares.”
     “At its core, this case is about theft by deception,” the complaint states. Levin claims the PHLX board and the defendants concealed the “true value” of the PHLX, which he estimates at $250 million to $350 million. He claims that “the viability of the PHLX was misrepresented as being questionable at best, and, at worse, in danger of imminent failure,” and that “the future of the PHLX could be salvaged through equity capital investments if only the PHLX had a ‘currency’ to use, i.e., stock, to facilitate those investments and that would be made available with demutualization.”
     The class also sues Jeffrey Yass, the owner or controllers of the largest interest in Susquehanna, and PHLX CEO and Chairman Meyer “Sandy” Frucher. It is represented by Steven Mirow.

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