The plaintiffs allege that CME violated members’ rights when it moved its main electronic trading platform to Chicago’s western suburb of Aurora in 2012. One such benefit for members was lower trading fees. , but the Aurora system often resulted in a leveling of fees between members and non-members, and in some cases, charging lower fees to non-members, according to the lawsuit.
CME’s efforts to dismiss the lawsuit were unsuccessful, and now he has lost his offer to avoid class certification. Much of the legal discovery has taken place in the meantime, finally highlighting the resolution of this long-standing dispute.
The company nevertheless continues to take a hard line. “This case is without merit and CME Group will continue to vigorously defend itself against these allegations,” a spokeswoman said in an email.
At the heart of the dispute is what these longtime traders see as fundamental betrayal after paving the way for exchanges, originally owned by members, to go public and combine. In many other similar cases, like the New York Stock Exchange or Nymex, the exchanges bought out memberships when they migrated from member-owned platforms to publicly traded companies. CME kept memberships intact and promised members would continue to benefit, according to plaintiffs’ attorneys.
The result was the opposite. A membership worth over $ 1 million in 2007 when CME acquired CBOT is now worth a few hundred thousand dollars, according to attorney Steve Morrissey, a partner at Susman Godfrey, who represents the plaintiffs. Meanwhile, CME shares have risen significantly.
With thousands of members affected, damages could reach hundreds of millions or more if a jury concludes that the decline in members’ value is due to what plaintiffs say is a violation of CME’s agreement with them.
CME’s annual net income from 2018 to 2020 averaged $ 2.1 billion, to put the consequences of such large potential damage into context.
Many of the plaintiffs are former traders from the days of the public outcry, when Chicago’s noisy raw material pits were regularly featured in documentaries about the city and its unique features. They are now in their sixties or sixties in many cases and considered that the nuggets and retirement assets of membership should be passed on to their heirs.
While the group’s certification is a critical step – and often in other class actions such a decision leads to settlement discussions – there is no indication that it will happen anytime soon. There are more discoveries to be made even though a good game has taken place.
Determining the damage, if CME is found responsible, is complicated. The judge in the case, Celia Gamrath, made it clear that different types of memberships (former Board of Trade members versus those of Merc, for example) would be entitled to different treatment if CME were found liable.
But, she wrote in the decree of December 3: “This court concludes that a class action is the most effective way to resolve this controversy. While there are different rights and privileges associated with different divisions and Series B shares, the creation of nine sub-categories to address these variations makes this case manageable and suitable as a class action lawsuit.
The case will also move to a different division within the Cook County system and a different judge, now that it is heading towards a potential trial. This judge will have to rule on a future motion for summary judgment by then.
A trial would not be likely until 2023 at the earliest.
For CME, however, the choice may well be to take a shot at a Cook County jury given all the time that has passed and the impairment suffered by aging members.