The 977 members of the New York Board of Trade (Nybot) approved their proposed acquisition by the Intercontinental Exchange (ICE) by 93%, but days before the Dec. 11 vote, Nybot permit holders filed a lawsuit attempting to stop the vote and secure financial consideration for approximately 600 Nybot permit holders.
“There is a very real concern that the ICE deal is going to destroy everybody’s livelihood,” says Jeffrey L. Bernfeld, of Bernfeld, DeMatteo & Bernfeld, one of the attorneys representing the permit holders. He says the permit holders have been cut out of the merger decision-making process despite previously having held voting rights and equity status at their predecessor exchanges, the New York Cotton Exchange, the Coffee, Sugar and Cocoa Exchange and the New York Financial Exchange, which merged to form Nybot.
In a press release, Nybot stated, “We note that under exchange bylaws, permit holders do not own equity in the exchange, have no right to vote and have no right to receive any distributions of cash or property, whether upon liquidation, merger or otherwise.” A spokesperson for the exchange declined further comment.
According to Nybot bylaws, permit holders, lessees and member firms have the same obligations of equity members “except as provided by the Board,” and “shall not have any of the rights and privileges of Equity Membership.” Further, the bylaws state, “Without limiting the generality of the foregoing, Permit Holders, Lessees and Member Firms will not have any voting rights in the Exchange or any rights to receive any distributions of cash, securities or other property, whether on dissolution, liquidation, merger, consolidation or otherwise.”
“Our clients have built a livelihood as traders at Nybot and they are not going to sit still and let the equity members trade away their livelihood,” Bernfeld says.
The Nybot was initially valued at $1 billion, but the rising value of ICE stock has increased that to approximately $1.5 billion.