By Alexander Osipovich

Exchange giant CME Group prevailed on Friday in its decade-old legal battle with former floor traders when a jury rejected claims that the company breached its contract with them when it pivoted to electronic markets.

The unanimous verdict came at the conclusion of a three-week trial that delved into the history of Chicago's exchanges, featuring testimony from top executives as well as retired traders who reminisced about their days wheeling and dealing in open-outcry trading pits.

"We are obviously surprised and disappointed in the result," said Stephen Morrissey, a lawyer for the traders, who originally filed their lawsuit in 2014. "We do not think it was consistent with either the evidence or the court's instructions, so we are going to consider next steps."

A CME spokeswoman didn't immediately comment. The company noted the verdict in a brief securities filing. It had said previously that it expected to win the dispute.

The plaintiffs had sought around $2 billion in damages. They argued that CME violated its promises to the traders who were its original owners before the exchange demutualized, or converted into a for-profit company, in 2000.

To win their support for demutualization, the exchange's leaders offered the traders a special class of shares -- known as B shares -- and assured them that they would retain "trading floor rights and privileges."

But after CME launched a massive data center for electronic trading in the Chicago suburb of Aurora, Ill., in 2010, the plaintiffs say the value of B shares stagnated, even as the price of the company's publicly traded A shares have surged in the years since.

In a class-action lawsuit originally filed in 2014, the plaintiffs said that the Aurora data center effectively became CME's new trading floor, and argued that they weren't sufficiently compensated for the erosion of the value of their trading rights. All but one of CME's open-outcry pits are now defunct.

CME denied violating its agreement with the traders. The company said their rights only applied to traditional open-outcry floors, not electronic or virtual floors. It also noted that the floor traders received valuable A shares as part of the demutualization.

Gerald Petrow, a former soybean trader who now owns a pizza restaurant, testified about the days when the pits were jam-packed and traders used hand signals to communicate over the nonstop yelling. "It was electrifying," he said, recalling his first day on the floor of the Chicago Board of Trade in 1988. CBOT later merged with the Chicago Mercantile Exchange.

CME Chief Executive and Chairman Terrence Duffy also took the witness stand. A former hog futures trader, Duffy recounted in court how he was inspired to join the mercantile exchange while he was working as a bartender and met some CME traders.

Later, as chairman, Duffy helped navigate CME's shift to electronic trading. On the witness stand, Duffy testified that he resisted closing the open-outcry pits even as electronic trading made rapid inroads in the late 2000s.

"I thought it was important that we continue to let those members participate on the trading floor as long as there was some kind of business there," he recalled. "So I let it go a little bit longer than it probably should have."

Write to Alexander Osipovich at alexo@wsj.com

(END) Dow Jones Newswires

July 25, 2025 17:11 ET (21:11 GMT)

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