By: Greg Burns, Chicago Tribune: November 4th, 2009
The former president of the New York Stock Exchange and a pair of prominent software developers suffered a courtroom defeat Tuesday in a long-running business dispute with a veteran of the Chicago Mercantile Exchange trading floor.
A Cook County Circuit Court jury awarded $11 million in damages to Lewis Borsellino in a case that pitted the one-time open-outcry trader against ex-NYSE chief Gerald Putnam and software moguls Stuart and MarrGwen Townsend, who developed the all-electronic Archipelago stock exchange.
The jurors concluded that Putnam and the Townsends misrepresented or concealed material facts in a 1998 meeting that led Borsellino to sell his interest in a forerunner of Archipelago for a fraction of its value.
“The jury took his side over these powerful people,” said Jon Loevy, Borsellino’s attorney. “They made a finding that the former head of the New York Stock Exchange committed fraud.”
Edward B. Ruff ΙΙΙ, lead attorney for Borsellino’s opponents in the case, declined to comment after the verdict.
Borsellino said he felt vindicated after pressing the case for nine years. “It was worth it,” he said.
He also expressed disappointment at the amount of the verdict after requesting $100 million in damages, but added, “$11 million is a lot of money.” Loevy vowed to appeal a judicial decision that barred the jury from considering punitive damages.
Borsellino, Putnam and the Townsends launched a computerized day-trading business in 1996, using software that provided easy access to the Nasdaq stock market. Borsellino mainly recruited traders.
Using technology that Borsellino maintained they developed through the day-trading business, Putnam and the Townsends started Archipelago. In 1998, Borsellino gave up all claims against his partners in exchange for $250,000, the amount of his original investment in their day-trading venture, according to court records.
Months later, Archipelago signed a deal with investment bank Goldman Sachs.