The New York Mercantile Exchange (Nymex) may take legal action against Valhalla, NY-based brokerage firm Optionable, the exchange’s chief executive officer James Newsome announced this week.“We’re continuing to negotiate with the principals, or, if dissatisfied, we will take legal action that will be typical of any harmed shareholder,” he said on Monday. A spokesperson for Nymex declined to comment on the scope and extent of negotiations.
Last Thursday, Kaplan Fox & Kilsheimer, a New York law firm, filed a class action suit on behalf of Optionable's stockholders, after the news broke of Optionable's involvement in massive commodity losses by the Bank of Montreal (BMO).
Nymex paid approximately $27 million for a 19% stake in Optionable on April 10, and acquired warrants of up to 40% in the firm. Two weeks later, its biggest customer (BMO) reported C$680 million pre-tax commodity trading losses, causing Optionable shares to nosedive. BMO has since suspended its business relationship with the brokerage and is investigating the extent of its involvement in the recent commodity trading losses. Nymex resigned its representation on the board on April 14, stating it was “actively reviewing the situation” and aims to “avoid potential conflict of interest during our review.”
More on Regulation
Greater flexibility welcomed, but problems may remain for mortgage lenders
FCA investigating delays and handling of mis-selling cases
China is one of only two Asian countries with G-Sibs – but unlike Japan its banks can sidestep TLAC
Banks face loss of attractive source of dollar funding
Sign up for Risk.net email alerts
Sponsored video: MarketAxess
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.