The class action complaint was commenced in the United States District Court for the Eastern District of Pennsylvania on behalf of all persons who owned seats on the Philadelphia Stock Exchange ("PHLX") on October 22, 2003 against Keefe Bruyette & Woods, Inc. ("KBW") and one of its managing directors. The Complaint charges defendants with violations of the Securities Exchange Act of 1934 and the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The complaint alleges that in connection with other wrongdoing surrounding the demutualization of the PHLX and to facilitate that wrongdoing, KBW published false and misleading statements that caused class members to lose their state law appraisal rights and acquiesce in demutualization, resulting in a loss to seat owners of at least $500,000 per seat.
On December 14, 2007, the defendants filed a motion to dismiss the Class Action Complaint. On March 19, 2008, Judge Anita B. Brody granted the defendants’ motion to dismiss and the case was dismissed with prejudice. According to the Memorandum and Order, this federal securities class action case is barred by the Delaware Chancery Court's Settlement Order in Ginsburg v. Philadelphia Stock Exchange, Inc., et al., C.A. No. 2202-CC (Del Chancery Ct., New Castle County). On April 15, 2008, the plaintiffs filed a Notice of Appeal as the Memorandum and Order. The appeal is currently pending in the Third Circuit Court of Appeals.