ALBATROSS FLIES AGAIN
The saga involving the manipulation of the New York Futures Exchange’s (Nyfe) now de-listed Pacific Stock Exchange Technology Index options, which resulted in the default of longtime futures commission merchant Klein & Co., continues as a federal judge breathed new life into the case.
Lawsuits filed against Nyfe and its parent, the New York Board of Trade, and the New York Clearing Corp. have had little success getting to trial, but Jim Moore, president of hedge fund manager DGM, which manages a group of funds, had a victory May 27. A U.S. District Court judge allowed his claim that Nyfe, former Nyfe Chairman Norman Eisler and the P-Tech options settlement committee, of which Eisler was chairman, manipulated settlement prices in P- Tech options to go forward. The suit contends that Eisler was acting as an agent for Nybot at the time.
A previous lawsuit brought by Moore was dismissed, as was a suit brought by three locals who traded P-Tech options. A suit brought by Klein & Co. is awaiting an initial ruling on a motion to dismiss by Nybot’s attorneys.
“We are moving to reargue [to dismiss the DGM suit],” says Howard Hawkins, Nybot attorney.
Michael Lacher, Moore’s attorney, calls the decision a victory for consumers in the trading marketplace.
“This is a sunshine case; all those records of all those manipulated trades will be brought out,” Lacher says.
Moore claims that DGM’s (now TIF Fund Management) family of funds had direct losses of $7 million in P-Tech options as a result of margin calls caused by the manipulated settlement prices in P-Tech. The suit asks for a minimum of $150 million in punitive damages and $25 million in actual damages.
Previous suits were dismissed because they failed to meet the legal standard of bad faith necessary for an action to go forward. Moore’s case differed from others because it presented evidence – which the defense acknowledged – that at least six Nyfe board members traded the P-Tech for accounts they controlled, showing they had a personal interest.
Copyright Futures Magazine Group Jul 2003
