Archipelago's Putnam cited for 'usurpation'
December 20, 2004
BY DAVID ROEDER Business Reporter
Gerald Putnam, chief executive of the electronic Archipelago stock exchange, cheated a onetime partner out of a share in a brokerage business a decade ago, a Cook County jury has ruled.
But the verdict, which came after about a month-long trial, leaves unclear how much, if any, monetary damages are due to the ex-partner, Fane Lozman. The jury ruled in Putnam's favor on separate counts of whether he breached written and oral contracts with Lozman.
The 12-person jury found that Putnam engaged in "usurpation of corporate opportunities" when he took business from a partnership he shared with Lozman to a new firm, Terra Nova Trading LLC. Lozman had no interest in Terra Nova, but the venture allegedly used trading software he helped invent.
The success of Terra Nova led to the founding of Archipelago in 1996. It was the first electronic stock market and its parent, Archipelago Holdings Inc., raised $126.5 million last August with a public stock offering.
Lori Iwan, an attorney for Putnam, said the verdict means her client will not have to pay damages. She said the jury upheld the validity of a release Putnam and Lozman signed in 1995 ending financial claims against each other.
Tony Valiulis, a lawyer for Lozman, disputed that characterization, saying the jury accepted his side's argument that the release was limited in its scope.
The issue of damages will be argued Jan. 26 before Circuit Judge Allen Goldberg, who could modify the verdict. In one of its forms filed with the verdict, the jury said the value of the Terra Nova venture was $2.5 million.Valiulis said he will ask Goldberg to approve compensation far higher than that.
An earlier ruling prevented Lozman's attorneys from including Archipelago as a defendant. The suit was filed in 1999. |
