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Ex-NYSE president Putnam denies fraud claim in court

</head> <body> <p>By Kyle Peterson</p> <p>CHICAGO (Reuters) - Former New York Stock Exchange president Gerald Putnam on Thursday denied claims in court that he and two others cheated a former business partner out of $30 million to $50 million.</p> <p>The case marks a clash of two well-known figures from the Chicago financial industry who were active in the migration of exchange trading from pits to computer screens.</p> <p>Lewis Borsellino, a former Chicago Mercantile Exchange trader, sued Putnam and two co-defendants, MarrGwen and Stuart Townsend. Borsellino accused them of fraud when they bought him out of a partnership they had formed to create a now-defunct electronic trading firm, Chicago Trading & Arbitrage (CTA).</p> <p>Borsellino's lawsuit alleges that a separate electronic trading company, Archipelago Holdings, which later merged with the NYSE and brought Putnam a fortune, is a CTA offshoot.</p> <p>He said he was tricked into selling his share in CTA for a fraction -- $250,000 -- of what he said would have been fair value of $30 million to $50 million for what should have been his stake in Archipelago.</p> <p>Interest in the case is intense in the secretive world of high-speed, high-volume traders in Chicago's derivatives markets like the CME and in global financial markets.</p> <p>"We're talking about people who screwed one guy," said attorney Jon Loevy, who is representing Borsellino in the trial being held in the Circuit Court of Cook County, Illinois.</p> <p>Borsellino said he sold his CTA share in February 1998, unaware of an impending multimillion-dollar investment in Archipelago, which Putnam had set up with the Townsends. He said he was misled about the true value of CTA.</p> <p>Archipelago later received a $50 million investment from Goldman Sachs and E-Trade, Loevy said.</p> <p>Ed Ruff, an attorney representing Putnam and the Townsends, told the court that Archipelago was a completely separate company from CTA, that Borsellino never owned a stake in it, and that investor interest in Archipelago came well after the three had parted ways with Borsellino.</p> <p>The $250,000 payment to Borsellino in 1998 was simply a settlement to get him to drop a previous lawsuit, Ruff said.</p> <p>"This is nothing more than Mr. Borsellino trying to take a second bite of the apple," Ruff said.</p> <p>(Reporting by Kyle Peterson, Editing by Peter Bohan and Steve Orlofsky)</p> </body> </html> </div><!-- end article-body --> </div><!-- end aticle-body-wrapper --> <aside> <ul class="social-share-btns clearfix"> <li><g:plusone size="medium" 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