Platinum Partners Value Arbitrage Fund, Ltd. Partnership v. Chicago Board Options Exchange
105 N.E.3d 160
Ill. App. Ct.2018Background
- Plaintiffs (Cayman investment funds) bought large positions in put options on the India Fund, Inc. (IFN); after IFN declared a capital gains distribution, OCC and CBOE adjusted IFN option strike prices downward, reducing plaintiffs’ positions.
- Plaintiffs allege OCC employees (help desk and corporate-operations personnel) told certain market participants, before the public memo, that a strike-price adjustment was expected or "there will be an adjustment." Audio recordings and an email corroborate pre-announcement private disclosures.
- OCC publicly announced the adjustment on December 20, 2010; plaintiffs claim the private, premature disclosures caused unfair trading and supported fraud and consumer-securities claims.
- This court previously held (on a 2-615 review) that private, pre-public disclosures are not protected by regulatory immunity and that plaintiffs stated viable claims; the case returned to the trial court for discovery.
- The trial court later granted summary judgment for OCC solely on regulatory-immunity grounds, reasoning the disclosures were nonpublic but not for OCC’s corporate benefit; plaintiffs appealed after a Rule 304(a) finding.
- On appeal the court reviews de novo whether (1) the record supports that private disclosures occurred and (2) such private disclosures are shielded by regulatory immunity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OCC’s private, pre-public disclosures about the IFN strike-price adjustment occurred | Record (audio, email, deposition admissions) shows help-desk and operations staff told callers the adjustment was anticipated or "will be" | OCC disputed characterization but produced recordings and admits some callers were told an adjustment was likely; argues disclosures did not mean selective/beneficial dissemination | Court: Record supports that private, premature disclosures occurred; genuine factual issue exists precluding immunity-based SJ |
| Whether regulatory immunity protects OCC for the private disclosures | Private, selective dissemination of a regulatory decision is not a regulatory function and thus not immune | OCC contends actions were within delegated regulatory duties and therefore absolutely immune; argues immunity covers help-desk communications | Court: Regulatory immunity is narrow and objective; private, premature disclosures are not incidental to SRO regulatory duties and therefore not immune as a matter of law per prior holding |
| Relevance of OCC’s subjective intent or corporate profit motive to immunity | Plaintiffs: Objective test governs immunity; subjective intent irrelevant; acts are actionable if not incidental to regulatory functions | OCC: Emphasizes lack of proof it acted for corporate benefit or to favor members; argues not-for-profit status and open access negate private-benefit theory | Court: Subjective intent is irrelevant; trial court erred in making intent central. Whether disclosures were for corporate benefit is measured objectively by whether acts were incidental to regulatory function |
| Whether appellate court should resolve plaintiffs’ cross-motion for summary judgment on the merits | Plaintiffs asked appellate consideration of their cross-motion on merits if immunity ruling reversed | OCC asked court not to consider plaintiffs’ cross-motion | Court: Declines to resolve plaintiffs’ merits motion; denial-of-summary-judgment is interlocutory absent disposition of all issues—remands for further proceedings |
Key Cases Cited
- Weissman v. National Ass’n of Securities Dealers, Inc., 500 F.3d 1293 (11th Cir.) (regulatory immunity must be narrowly construed)
- Wolfram Partnership, Ltd. v. LaSalle National Bank, 328 Ill. App. 3d 207 (Ill. App. 2001) (appellate review of cross-motions for summary judgment limited to same-claim disposition)
- Pekin Insurance Co. v. Roszak/ADC, LLC, 402 Ill. App. 3d 1055 (Ill. App. 2010) (standards governing summary judgment review)
- Clark v. Children’s Memorial Hospital, 2011 IL 108656 (Ill. 2011) (denial of summary judgment is interlocutory and generally not appealable)