Opinion ID: 2319629
Heading Depth: 1
Heading Rank: 3

Heading: Suboptimal Process

Text: In early- or mid-December, Amirsaleh instructed his executive assistant, Donna Stavrinou, to follow up with NYBOT Member Services regarding the Merger. NYBOT Member Services told Stavrinou that the Election Forms would be mailed soon. On December 19, 2006, the Election Forms were mailed to NYBOT Members at their addresses of record. Amirsaleh did not receive the Election Form in the mail. Although the Merger Agreement and Proxy Statement/Prospectus did not identify a specific date for the Election Deadline, the first page of the Election Form provided: ELECTION DEADLINE: JANUARY 5, 2007. The third page of the Election Form further stated: Election Deadline. To be effective, an election on this election booklet must be properly completed, signed, delivered to and received by [Computershare] no later than the Election Deadline. All elections will be irrevocable after 5:00 p.m., New York City time, on the Election Deadline, which is January 5, 2007. NYBOT Members and NYBOT Member Firms whose election booklets are not so received will not be entitled to specify their preference as to the form of merger consideration that they may receive and will be deemed to have made a no election with respect to their NYBOT Membership Interests.... When the Defendants learned that some NYBOT Members, including Amirsaleh, had not submitted the Election Form by the January 5, 2007 Election Deadline (the Initial Deadline), the Defendants hesitated in deciding whether to continue accepting Election Forms. The Defendants initially decided not to accept Election Forms after the Initial Deadline, unless the NYBOT Member could show that the Defendants caused the delay, such as by (for example) mailing the Election Form to the wrong address. The Defendants then considered whether the Initial Deadline should be extended to January 8, because mail service was suspended on January 2 for the National Day of Mourning (recognizing President Ford's passing). On January 9, the Defendants decided not to extend the Initial Deadline because they had not received any Election Forms in the mail the previous day. But, during the next few days the Defendants received several Election Forms from NYBOT Members who complained about the process and threatened to sue if their Election Forms were not honored. The Defendants maintained a list of those complaints, for the apparent purpose of analyzing whether any of them had merit. The Defendants eventually decided not to use that list. The Merger then closed on January 12one week after the Initial Deadline. After the Merger closed, there was a limited period of time available to process the data contained in the Election Forms. The Merger Agreement provided that, within ten business days after the closing of the Merger, ICE was contractually obligated to cause [Computershare] to effect the allocation among the Members of rights to receive ICE Common Stock and/or cash in the Merger in accordance with the Election Forms and the Merger Agreement's allocation and proration provisions. The Merger consideration was to be distributed by January 29, 2007. Five days after the Merger closed, on January 17, the ICE legal team concluded that the Defendants should waive the Initial Deadline and continue to accept Election Forms. ICE Chairman and CEO Jeffrey Sprecher primarily drove that decision, intending to accommodate as many late Election Forms as possible. In a 3:11 p.m. email to Linda Chin of NYBOT Member Services, Donnie Amado of Computershare sought to achieve that objective by attaching a spreadsheet that listed all fifty-one NYBOT Members (including Amirsaleh) who had not yet submitted Election Forms. Chin used that list to contact those NYBOT Members. Chin called Amirsaleh's office and left a message. The next morning (January 18), Chin called Amirsaleh's office again and left another message. That afternoon, at 4:40 p.m., Stavrinou returned Chin's call and learned that Amirsaleh had to submit an Election Form to continue in the new enterprise. [2] Stavrinou informed Chin that Amirsaleh was traveling. Amirsaleh's travel itinerary reflects that he was scheduled to be in flight from Newark, New Jersey to Las Vegas, Nevada from 4:25 p.m. to 10:18 p.m. In a 4:50 p.m. email to Amirsaleh and Stavrinou, Chin attached an electronic version of the Election Form and wrote: In the attempt to save your Memberships, please complete attached and fax a copy to Computershare ... and overnight the original to Computershare.... Chin also added: I cannot guarantee that his booklet will be accepted. Three hours later, Computershare received the last Election Form that the Defendants deemed timely. That Form was submitted by Kevin Davis. [3] Although Davis attached his Election Form in a 5:20 p.m. email to NYBOT Member Services, that Form was not technically received until NYBOT Member Services forwarded Davis' email to Computershare at 7:38 p.m. Even then, Davis's Election Form was deficient in several respects. [4] Amirsaleh faxed his completed Election Form, in which he elected to receive 100% stock for each of his two NYBOT Membership Interests, to Computershare the next day (January 19), at approximately 2:06 p.m., which was 11:06 a.m. in Las Vegas. Then, approximately one hour later, Davis corrected a deficiency in his earlier submission. [5] Despite the fact that the proration and allocation process was delayed until January 22 (at the earliest), [6] the Defendants treated Amirsaleh's submission on January 19 as untimely, and deemed Amirsaleh's Membership Interests as No Election Shares. Because the cash component of the Merger consideration was sufficiently undersubscribed, each No Election Share received all cash consideration. Consequently, Amirsaleh lost his NYBOT trading rights and did not receive any shares of ICE common stock in exchange for his NYBOT Membership Interests.