CBOE settles members lawsuit, settng stage for demutualization

The Chicago Board Options Exchange agreed to pay $4.17 million to settle appeals in a three-year- old lawsuit related to its ownership structure, clearing the way for its conversion into a stock-based company.

The Chicago-based options exchange said former members of the Chicago Board of Trade who held out after a judge approved a settlement of the suit last year agreed to dismiss their claims. Former CBOT seat holders claimed they were owed a bigger stake of the CBOE based on the exchange's merger in 1973.

"While we are quite comfortable that the appeals would not have been successful, we concluded that the settlement is in the best interest of CBOE and its seat owners because settlement of the appeals would eliminate all remaining litigation impediments to demutualization within days or weeks instead of months," the CBOE said in a statement on its Web site.

CBOE memberships have more than doubled from a three-year low of $1.2 million in March on speculation the 36-year-old U.S. derivatives market will be taken over. CBOE, which plans to become a for-profit, shareholder-owned company, had said it won't be able to change its status until the lawsuit is settled over how its membership interests are divided.