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EFiled: Feb 04 2015 08:32PM EST

Transaction ID 56720190
Case No. 10136-VCL

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE


In re GFI GROUP INC.
STOCKHOLDER LITIGATION

CONSOLIDATED
C.A. No. 10136-VCL

PLAINTIFFS SECOND MOTION FOR EXPEDITED PROCEEDINGS


Pursuant to Court of Chancery Rules 30, 34, 45, and 173, Plaintiffs hereby
move this Court for an order expedited proceedings in the above-captioned action
and setting a hearing and/or trial date on Plaintiffs forthcoming motion for
preliminary and mandatory injunctive relief. The grounds for Plaintiffs Motion
are set forth in Plaintiffs Brief in Support of the Second Motion for Expedited
Proceedings filed contemporaneously herewith.
February 4, 2015
BERNSTEIN LITOWITZ
BERGER & GROSSMANN
LLP
Mark Lebovitch
David Wales
Edward G. Timlin
1285 Avenue of the Americas
38th Floor
New York, NY 10019
Co-Lead Counsel for Plaintiffs

GRANT & EISENHOFER P.A.


/s/ Mary S. Thomas
Stuart M. Grant (#2526)
Mary S. Thomas (#5072)
123 Justison Street
Wilmington, DE 19801
(302) 622-7070
Co-Lead Counsel for Plaintiffs

KESSLER TOPAZ MELTZER


& CHECK, LLP
Marc A. Topaz
Lee D. Rudy
Michael C. Wagner
280 King of Prussia Rd
Radnor, PA 19087
(610) 667-7706
Co-Lead Counsel for Plaintiff

PRICKETT, JONES & ELLIOTT, P.A.


Michael Hanrahan (#941)
Paul A. Fioravanti, Jr. (#3808)
Kevin H. Davenport (#5327)
1310 N. King Street
P. O. Box 1328
Wilmington, Delaware 19899-1328
(302) 888-6500
Executive Committee Member

CERTIFICATE OF SERVICE
I, Mary S. Thomas, hereby certify that, on February 4, 2015, I caused a copy
of the foregoing Plaintiffs' Second Motion for Expedited Proceedings to be filed
and served upon the following counsel of record via File & ServeXpress:
William M. Lafferty
Leslie A. Polizoti
Lindsay M. Kwoka
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 N. Market Street
Wilmington, Delaware 19899-1347
Samuel A. Nolen
Kevin M. Gallagher
Rachel E. Horn
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square, 920 North King Street
Wilmington, Delaware 19801
Edward P. Welch
Edward B. Micheletti
Jenness E. Parker
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
920 North King Street
Wilmington, Delaware 19899-0636

C. Barr Flinn
Kathleen S. McCormick
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Rodney Square, 1000 North King Street
Wilmington, Delaware 19801
/s/ Mary S. Thomas
Mary S. Thomas (Del. ID #5072)

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

In re GFI GROUP INC.

CONSOLIDATED

STOCKHOLDER LITIGATION

C.A. No. 10136-VCL

PLAINTIFFS BRIEF IN SUPPORT OF SECOND MOTION FOR


EXPEDITED PROCEEDINGS

TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .................................................................................... ii
INTRODUCTION .....................................................................................................1
RELEVANT FACTUAL AND PROCEDURAL HISTORY ...................................2
ARGUMENT .............................................................................................................9
A.

Plaintiffs Have Alleged Colorable Claims ..................................................11

B.

Plaintiffs Face A Threat Of Immediate and Irreparable Injury ...................15

C.

The Balance of Hardships Favors Expedited Proceedings ..........................17

REQUESTED RELIEF ............................................................................................18

TABLE OF AUTHORITIES
Page(s)
Cases
Alpha Natural Res., Inc. v. Cliffs Natural Res., Inc.,
2008 WL 4951060 (Del. Ch. Nov. 6, 2008) ....................................................... 10
Box v. Box,
697 A.2d 395 (Del. 1997) ..................................................................................... 9
In re Cogent, Inc. Sholder Litig.,
7 A.3d 487 (Del. Ch. 2010) ..........................................................................16, 17
Gantler v. Stephens,
965 A.2d 695 (Del. 2009) ................................................................................... 14
Gomi Investors, LLC v. Schimmell Holdings, Inc.,
2006 WL 2304035 (Del. Ch. July 27, 2006) ........................................................ 9
Hollinger Intl v. Black,
844 A.2d 1022 (Del. Ch. 2004) .......................................................................... 13
Icahn Partners L.P. v. Amylin Pharms., Inc.,
2012 WL 1526814 (Del. Ch. Apr. 20, 2012) ...................................................... 10
In re InfoUSA, Inc. Sholders Litig.,
2007 WL 3325921 (Del. Ch. Aug. 20, 2007) ..................................................... 13
Mills Acquisition Co. v. Macmillan, Inc.,
1988 WL 108332 (Del. Ch. Oct. 18, 1988), revd on other grounds
550 A.2d 35 (Del. 1988) ..................................................................................... 16
In re Netsmart Techs., Inc. Sholder Litig.,
924 A.2d 171 (Del. Ch. 2007) ............................................................................ 15
In re Pure Resources Inc. Sholder Litig.,
808 A.2d 421 (De. Ch. 2002) .......................................................................14, 17
In re Southern Peru Copper Corp. Sholder Deriv. Litig.,
52 A.3d 761 (Del. Ch. 2011) .............................................................................. 11
ii

T.Rowe Price Recovery Fund, L.P. v. Rubin,


770 A.2d 536 (Del. Ch. 2000) ............................................................................ 14

iii

INTRODUCTION
Plaintiffs recognized from the beginning of this case that founder and
Executive Chairman Mickey Gooch, and his ally, Colin Heffron, were putting their
personal interests ahead of their fiduciary duties to the public stockholders of GFI
Group Inc. (GFI or the Company). As the Court is aware, this case arose
when Gooch and Heffron tried to conceal a proposed management buyout of GFIs
IDB business by wrapping it in a purported sale to CME Group Inc. (CME) of
the entire Company (the CME Transaction) at an unreasonably low price
($4.55/share, compared to the $6.20 topping bid that should have been paid to
GFIs public stockholders). As described below, in the last few weeks, as the
CME Transaction unraveled in the face of the superior proposal by BGC Partners,
Inc. (BGC), Goochs fiduciary breaches, aided by Heffron and former Special
Committee member Marisa Cassoni (Cassoni), have become ever more
egregious.
As confirmed by the response of the Special Committees counsel to
Plaintiffs specific inquiries into statements purportedly made on behalf of the GFI
Board, Gooch and Heffron have now affirmatively overridden the Board process,
issuing unauthorized press releases in order to skew the outcome of BGCs tender
offer. Even in their most skeptical moments, Plaintiffs never envisioned that
Gooch and Heffron would resort to outright fraud and such brazen abuse of their

fiduciary powers as they have done in the last few weeks. For the reasons set forth
below, immediate judicial intervention is required to protect GFI stockholders.
RELEVANT FACTUAL AND PROCEDURAL HISTORY
As described in Plaintiffs Second Supplement to the Verified Class Action
Complaint (the January 30 Complaint), CME and the Management Consortium
(consisting of Gooch, Heffron, and related individuals and entities) increased their
joint bid for GFI to $5.60 per share on January 15, 2015. January 30 Complaint at
12.

BGC immediately offered $5.85 per GFI share if the GFI Board (the

Board) counter-signed and returned the executed tender offer, and $5.75 per share
if it did not (the January 15 Revised BGC Proposal). Id. at 13. The Special
Committee immediately and unanimously determined that the January 15 Revised
BGC Proposal was likely to lead to a Superior Proposal under the CME/GFI
merger agreement (the CME Merger Agreement). Id. at 14.
As required by basic governance norms, Gooch and Heffron had abstained
from earlier votes regarding the Boards decision on whether to engage in
negotiations with BGC. Id. at 7, 17. Recognizing, however, that their planned
purchase of the IDB business was slipping away and that the only alternative
would eliminate their control over GFI, Gooch and Heffron suddenly inserted
themselves back into the Boards process, voting against the Special Committees
January 15, 2015 determination that the January 15 Revised BGC Proposal was
2

likely to lead to a superior proposal. Id. at 17. This maneuver was effective
only because Cassoni reversed her prior position in support of negotiating with
BGC and joined Gooch and Heffron in voting against the Special Committees
determination. Id. Only discovery will tell whether Cassonis allegiance to Gooch
comes from misplaced loyalties, fear, or something else. The 3-2 Board vote
prohibited the Special Committee from negotiating with BGC for enhancements to
the tender offer terms. Id. at 9.
This farce repeated in the ensuing days. On January 20, 2015, CME and the
Management Consortium offered $5.85 per share, matching BGC. Id. at 18.
BGC immediately offered $6.20 per GFI share if the Board counter-signed and
returned the executed tender offer, and $6.10 per share if it did not (the January
20 Revised BGC Proposal).

Id. at 19.

Again, the Special Committee

immediately and unanimously determined that the January 20 Revised BGC


Proposal was likely to lead to a Superior Proposal under the CME Merger
Agreement. Id. at 20. Again, Gooch and Heffron voted against the Special
Committees determination, and in favor of their conflicted self-interest. Again,
Cassoni voted with the disloyal fiduciaries and against the obvious best interests of
GFIs public stockholders.

Id. at 24.

Again, the Special Committee was

prevented from negotiating with BGC. Id. at 2, 6.

Gooch and Heffron understood and acknowledged the way their conflict
constrained their ability to use their fiduciary positions, having previously
abstained from the Boards process of evaluating the BGC bid. Id. at 17. But to
protect their self-interests, they changed course when they could no longer
compete with the consistently higher BGC proposals. As set forth herein, Gooch
and Heffron, joined by Cassoni, have: (i) hamstrung the Special Committee in its
efforts to negotiate with BGC; (ii) misled GFIs public stockholders about the
terms of BGCs bid and the basis for the Boards supposed recommendation in
favor of the CME Transaction and against tendering to BGC; and (iii) even acted
on purported behalf of the Board without any authorization.
BGCs Tender Offer was to remain open until 5:00 p.m. on February 3,
2015. On January 29, BGC publicly reaffirmed its commitment to the $6.10 tender
offer and strongly urged stockholders to oppose the CME Transaction at $5.85.
On Friday, January 30, 2015, GFIs public stockholders overwhelmingly
rejected the CME Transaction. 1

Both GFI and CME then announced their

termination of the CME Merger Agreement.


Later on January 30, 2015, GFI issued a press release (the January 30 Press
Release), purportedly on behalf of the Board, stating
1

To the extent that Plaintiffs allegations, which deal in part with events unfolding
over the last several days, are not yet reflected in the current pleadings, Plaintiffs
will be filing a Motion for Leave to Further Supplement the Complaint and a
proposed Third Supplement to the Complaint by the end of this week.
4

GFI Group Inc. . . . announced today that the Companys Board of


Directors will explore strategic alternatives with any and all interested
parties to maximize shareholder value for all shareholders. These
alternatives could include, among others, joint ventures, mergers
and/or acquisitions.
This was a deeply troubling announcement. The Board had just muddled through a
six-month public auction process. Exploring alternatives now would not yield
any benefits commensurate with the risk of losing the BGC transaction.
An even more surprising follow-up press release was issued on Monday,
February 2, 2015 (the February 2 Press Release), also purportedly on behalf of
the Board, stating:
The GFI Board urges shareholders to take no action on the BGC
tender offer at this time. As announced on Friday, the GFI Board is
actively engaged in a process to explore strategic alternatives with any
and all interested parties to maximize shareholder value for all
shareholders. These alternatives could include, among others, joint
ventures, mergers and/or acquisitions. The Board has previously
reviewed the unsolicited BGC tender offer, which contains provisions
and conditions that make it highly unlikely to succeed in providing
any value for shareholders. The Board urges GFI shareholders not to
tender into the BGC tender offer and wait for the Board to conduct its
strategic review.
These press releases were baffling. Even before stockholders rejected the CME
Transaction, the January 20 Revised BGC Proposal offered materially better value
to stockholders (i.e., $6.10 versus $5.85 per share). But after GFI stockholders
rejection of that deal, there was no reasonable justification for continued Board
opposition to BGCs tender offer.
5

In order to determine whether the Special Committee, having previously


supported engagement with BGC, was now turning against the public stockholders
(like Cassoni had) and supporting a futile strategic alternatives review instead of
engaging with BGC, Plaintiffs contacted the Special Committees counsel. In
response to Plaintiffs specific questions, the Special Committees counsel gave the
following remarkable response, stating that the Special Committee members:
(i) [] did not vote to issue the February 2 [P]ress [R]elease; (ii) [] never saw
a draft of the February 2 [P]ress [R]elease; (iii) [] did not know that GFI
intended to issue the February 2 [P]ress [R]elease; (iv) [] did not vote to urge
stockholders to not tender into the BGC tender offer or to not take any action
on the BGC tender offer after the CME merger agreement was terminated;
and (v) [] did not vote [on] Friday[, January 30, 2015] to explore new
strategic alternatives as described in the January 30 and February 2 [P]ress
[R]eleases.
Lebovitch Aff., 7.
The January 30 and February 2 Press Releases clearly had one purpose: to
discourage GFIs public stockholders from tendering to BGC so that BGC would
not meet the 45% threshold for completion of BGCs outstanding tender offer.
Gooch and Heffron breached their duty of loyalty by issuing these press releases in
the Boards name in an effort to influence stockholder decision-making on the
pending tender offer, but without proper Board authority and without even
consulting the Special Committee that the Board had charged with keeping the
conflicted directors in check. Stockholders were misled into thinking that the
independent Board members still opposed the January 20 Revised BGC Proposal
6

and that further exploration of alternatives was fruitful and without grave risks to
the public stockholders.
This morning, BGC announced that 37.9 million shares had been tendered,
which, including shares already owned by BGC, was 43.3% of GFIs outstanding
shares and 70% of shares not owned by GFI executives and directors. Especially
in a heated proxy fight, the position of a board matters to many stockholders.
Surely BGC would have met the 45% threshold had Gooch and Heffron not misled
stockholders through the January 30 and February 2 Press Releases.
There is still (limited) time to remedy these misdeeds, however, because
BGC also announced that the tender offer has been extended to February 19, 2015.
Thus, assuming that another 1.7% of stockholders (armed with correct
information) tender their shares in the next two weeks, the only hurdle to closing
the tender offer will be BGCs condition of two-thirds board representation (the
BGC Board Condition). This condition should be no hurdle to completing a
deal. Any director acting in good faith would recognize that the Board should act
to meet this condition in order to allow public stockholders to obtain the $6.10
price per share offered by BGC.

Indeed, the Special Committees financial

advisor, Greenhill, has now given four fairness opinions (at $4.55 per share, $5.25
per share, $5.60 per share, and $5.85 per share). But, as explained in Plaintiffs
January 30 Complaint, Gooch and Heffron have repeatedly voted against proposals
7

supported by the Special Committee that would have allowed for negotiations with
BGC. If they are allowed to do the same with respect to any vote regarding
satisfaction of the BGC Board Condition, they will outvote the now two-member
Special Committee. Unless Gooch and Heffron are enjoined from interfering, the
stockholders will lose the transaction now on the table.
Thus, Plaintiffs seek an order: (i) requiring that Gooch and Heffron correct
the statements made in the unauthorized January 30 and February 2 Press Releases;
(ii) enjoining Heffron and Gooch from making further statements or taking action
with respect to any possible strategic transaction on the purported behalf of GFI,
without the Special Committees prior approval; (iii) enjoining Gooch and Heffron
from participating in any discussions or attending any meetings (except at the
Special Committees request or as a counterparty) on any issues regarding a
potential sale of all or part of GFI to BGC, including any Board meetings or
discussions regarding the BGC Board Condition; (iv) enjoining Gooch and Heffron
from taking any action that would prevent the Special Committee from convening
a Board meeting to consider and/or vote on the sale or potential sale of all or part
of GFI to BGC, or on any contemplated or actual steps to satisfy the BGC Board
Condition; and (v) in the event that BGC obtains the 45% tender offer condition,
mandating that the Special Committee (with assistance from Heffron, Gooch, and
Cassoni as necessary), take all steps necessary to meet the BGC Board Condition.
8

Plaintiffs seek an expedited hearing and/or trial in order to provide the


necessary evidentiary support for the requested relief. Whether Plaintiffs claims
are litigated at a preliminary injunction hearing or through trial, all Plaintiffs need
in terms of discovery (subject to future developments) are updated custodial
documents and communications from the Special Committee, Cassoni, Gooch, and
Heffron, and depositions of Cassoni and Gooch. In the event this Court schedules
a trial, one day should suffice, as Plaintiffs do not anticipate submitting live
evidence, other than the testimony of these two individuals and potentially one
Special Committee member. In light of the pending BGC tender offer, Plaintiffs
are prepared to present their evidence before the tender offer expires.
ARGUMENT
The Court should expedite this Action because Plaintiffs have articulated
colorable breach of fiduciary duty claims and shown a sufficient possibility of
irreparable injury. See Gomi Investors, LLC v. Schimmell Holdings, Inc., 2006 WL
2304035, at *1 (Del. Ch. July 27, 2006) (Good cause exists for granting a motion
to expedite where a plaintiff. . . . articulate[s] a sufficiently colorable claim and
show[s] a sufficient possibility of a threatened irreparable injury); Box v. Box, 697
A.2d 395, 399 (Del. 1997) (Delaware courts are always receptive to expediting
any type of litigation in the interests of affording justice to the parties).
Expedited proceedings are particularly appropriate when, as here, stockholders will
9

lose an opportunity to maximize their stockholdings should Defendants continue to


breach their fiduciary duties. See, e.g., Icahn Partners L.P. v. Amylin Pharms.,
Inc., 2012 WL 1526814, at *2-3 (Del. Ch. Apr. 20, 2012) (granting expedited
proceedings where boards refusal to engage with a potential acquirer offering a
substantial premium put stockholders opportunity to receive the premium at risk).
The threshold for expediting proceedings is low. To prevail, the court
merely needs to find that the plaintiff has articulated a sufficiently colorable claim
and shown a sufficient possibility of a threatened irreparable injury. Alpha
Natural Res., Inc. v. Cliffs Natural Res., Inc., 2008 WL 4951060, at *2 (Del. Ch.
Nov. 6, 2008) (quoting Giammargo v. Snapple Beverage Corp., 1994 Del. Ch.
LEXIS 199, at *4 (Del. Ch. Nov. 15, 1994)). A claim may be sufficiently
colorable even where it is not brightly colored.

City of Miami General

Employees and Sanitation Employees Retirement Trust v. C&J Energy Servs.


Inc., C.A. No. 9980-VCN (Del. Ch. Aug. 29, 2014) ORDER (finding cause to
expedite where there was no competing bidder but existing bidder did not offer a
premium). Here, where Plaintiffs allege that disloyal insiders are engaged in a noholds-barred attempt to undermine a high-premium offer in order to advance their
own personal interests and vendettas, and notwithstanding the significant risk that
GFIs stock price will drop if BGC walks away, Plaintiffs claims are more than
sufficiently colorable to warrant expedited proceedings.
10

A.

Plaintiffs Have Alleged Colorable Claims


Plaintiffs allege colorable breach of fiduciary duty claims when, as here,

they allege facts suggesting that the directors [exercised a] bad faith preference
for some other interest than that of the company and the stockholders. In re
Southern Peru Copper Corp. Sholder Deriv. Litig., 52 A.3d 761, 787 n.72 (Del.
Ch. 2011).
Gooch and Heffron are not opposing the BGC tender offer because they
believe that GFI stockholders are better off holding on to their GFI shares, and
likely suffering a steep stock price decline when the BGC deal is lost, rather than
selling to BGC for at least $6.10. Instead, Gooch and Heffron are opposing BGC
for at least two improper and self-interested reasons.
First, Gooch and Heffron are unwilling to surrender control of the Company
that they built, particularly to a hated rival like BGCs Howard Lutnick. But,
unable to use their equity stake to forestall such a change of control, Gooch and
Heffron are now openly using their fiduciary powers to serve their personal and
disloyal purposes.
Throughout the sales process beginning in 2013, Gooch used his equity
position to veto any possible transaction that would not result in him controlling
the core brokerage business of GFI. Now that the CME Transaction has been
rejected, Gooch and Heffron have resorted to more overt measures, using their
11

fiduciary position to sabotage any transaction where they lose control. Gooch and
Heffron would not allow the Board to negotiate with BGC when BGC made its
first approach late last July, and they definitely will not engage with BGC now that
BGC thwarted Goochs hoped-for transaction with CME. This, and Gooch and
Heffrons disloyalty, is confirmed by the fact that they broke their previous pattern
of abstention when they voted down the Special Committees recommendations
that the January 15 and January 20 Revised BGC Proposals were each likely to
lead to a Superior Proposal. It is a fair inference that Gooch and Heffron will
forever vote against any Board action to satisfy the BGC Board Condition, solely
so they can avoid losing control of their company to BGC (and Lutnick).
Second, and relatedly, despite their own equity stakes, Gooch and Heffrons
economic interests are adverse to GFIs public stockholders.

Because of the

unlawful 12-month dead hand tail provision embedded in the CME Support
Agreement, Gooch and Heffron cannot tender their shares to BGC for almost a
year, no matter what price is offered. Because the Management Consortium faces
a year of being locked in an investment with BGC as a controlling shareholder,
Gooch and Heffron are inherently against any BGC offer, regardless of price.
Plaintiffs have also stated a colorable claim that Gooch, Heffron, and
Cassoni unlawfully interfered with the Special Committee. On January 15, 2014,
the Board resolved to form the Special Committee, and empowered it to, among
12

other things, consider the CME deal, negotiate with CME and the Management
Consortium, decide not to pursue the CME deal, and explore other transformative
transactions. No Board action or intervening event has disbanded the Special
Committee or curtailed its powers or authority. Nevertheless, Gooch, Heffron, and
Cassoni are interfering with the Special Committee by refusing to call prompt
board meetings and overriding its determinations regarding the BGC proposals for
disloyal reasons.
There is every reason to think that they will continue to do so to sabotage the
Special Committees effort to fulfill the BGC Board Condition. Unless these
flagrantly disloyal fiduciaries are prevented from actively and continually using
their fiduciary powers as a weapon against BGC, GFIs stockholders will lose this
high-premium transaction, and the stock price will plummet.
This Court has broad powers to fashion equitable relief when fiduciaries so
blatantly abuse their position to benefit themselves to the detriment of
stockholders. See, e.g., Hollinger Intl v. Black, 844 A.2d 1022 (Del. Ch. 2004)
(invalidating a controlling stockholders disloyal effort to disband a committee
formed to consider alternatives in order to protect a personally beneficial
transaction); In re InfoUSA, Inc. Sholders Litig., 2007 WL 3325921, at *23 (Del.
Ch. Aug. 20, 2007) (disloyalty adequately pled where the five board members who
were not on the special committee voted to abolish it before it could assess
13

alternatives to the controlling stockholders personally beneficial proposal);


T.Rowe Price Recovery Fund, L.P. v. Rubin, 770 A.2d 536 (Del. Ch. 2000)
(finding a substantial likelihood of liability and granting an injunction where the
controlling stockholder disbanded a special committee that refused to accede to his
demands).
Gooch and Heffron have also breached their fiduciary duties by making
improper and unauthorized disclosures concerning the BGC tender offer, including
the January 30 and February 2 Press Releases. GFI has now been publicly on the
market since at least the end of July 2014. If Defendants are to be believed, GFI
was quietly shopped to interested bidders since early 2014 or before. Since BGC
emerged as a potential intervening bidder, Gooch himself engaged with other
potential buyers. After a bidding war between CME/Gooch and BGC, BGC is
clearly the high bidder. Accordingly, the Companys public statements, made at
the beshest of Gooch and Heffron purportedly with Board authorization
pretending to start considering alternatives at this point are affirmatively
misleading and a breach of duty. See, e.g., In re Pure Resources Inc. Sholder
Litig., 808 A.2d 421, 450-51 (De. Ch. 2002) (holding that plaintiffs had a
reasonable probability of success on disclosure claims regarding omissions about
special committee involvement in a transaction); Gantler v. Stephens, 965 A.2d
695, 711-12 (Del. 2009) (holding that alleged misrepresentations regarding board
14

consideration of an alternative transaction were materially misleading and alleged


a breach of duty).
B.

Plaintiffs Face A Threat Of Immediate and Irreparable Injury


Plaintiffs and the Class face a sufficient possibility of a threatened

irreparable injury to justify expedited proceedings.

The only two remaining

impediments to GFI stockholders selling their shares at a 90% premium to the


price just prior to the announcement of the CME Transaction are (i) the tender by
an additional 1.7% of GFI stockholders to BGC and (ii) satisfaction of the BGC
Board Condition. As long as Gooch and Heffron are allowed to issue misleading
statements to stockholders and to interfere with the Boards decision-making
process, there is risk that neither condition will be satisfied. Stockholders who
believe the Board is truly shopping for a superior proposal, or who believe the
Board properly resolved to oppose BGCs offer, may not tender. And as long as
Gooch and Heffron are permitted to vote in favor of their improper self-interests
and use their influence over Cassoni to create a bloc on the Board, there is no
prospect of the Special Committee succeeding in protecting stockholder rights.
Preventing stockholders from taking advantage of a superior offer is plainly
irreparable harm. In re Netsmart Techs., Inc. Sholder Litig., 924 A.2d 171, 208
(Del. Ch. 2007) (In cases where the refusal to grant an injunction presents the
possibility that a higher, pending, rival offer might go away forever, our courts
15

have found a possibility of irreparable harm.) (citing QVC Network, Inc. v.


Paramount Commcns, Inc., 635 A.2d 1245, 1273 n.50 (Del. Ch. 1993) (Since the
opportunity for shareholders to receive a superior control premium would be
irrevocably lost if injunctive relief were not granted, that alone would be sufficient
to constitute irreparable harm). See also Mills Acquisition Co. v. Macmillan, Inc.,
1988 WL 108332, at *18 (Del. Ch. Oct. 18, 1988), revd on other grounds 550
A.2d 35 (Del. 1988) (taking action to deprive stockholders of the opportunity to
consider a higher offer following a full auction threatens irreparable harm to
stockholders). Yet this is precisely the harm that Gooch, Heffron and Cassoni are
trying to accomplish through manipulation of the Board process.
Absent expedition, GFIs public stockholders will forever be deprived of the
information necessary to make an informed decision as to whether or not to tender
their shares to BGC and, if the breaches remain uncured and/or if the breaches
continue, GFIs public stockholders may be deprived of the ability to obtain $6.10
per share in BGCs tender offer. Such a threat poses a sufficient risk of irreparable
harm. Delaware courts have recognized that [t]he importance of proxy disclosure
in the context of a tender offer cannot be overstated. In re Cogent, Inc. Sholder
Litig., 7 A.3d 487, 514 (Del. Ch. 2010). Therefore, t[h]is court has recognized
that irreparable injury is threatened when a stockholder might make a tender or
voting decision on the basis of materially misleading or inadequate information.
16

In re Pure Resources, 808 A.2d at 452; see also In re Cogent, 7 A.3d at 514
(finding that misleading or inadequate disclosures potentially give rise to
irreparable harm because a post-hoc evaluation of a plaintiffs disclosure claim
necessarily will require a court to speculate about the effect that certain
deficiencies may have had on a stockholder vote, resulting in an award of a lessthan-certain amount of money damages.).
More concretely, the breaches of duty have already caused and threaten to
cause additional irreparable harm to GFI stockholders as a result of credit rating
downgrades. Fitch has already downgraded GFIs credit rating, in part because
[o]n a stand-alone basis, GFIs financial and credit profile continued to weaken in
the nine months ended Sept. 30, 2014 . . . primarily due to increased professional
fees related to the CME transaction. Fitch has also indicated that further delay in
consummating a transaction stands to further harm GFI because, if GFI is unable
to close on a material transaction, Fitch believes that this would call into
question the long-term viability of GFIs business on a stand-alone basis, which
could put further pressure on the ratings. Stockholders will be irreparably harmed
if Gooch, Heffron, and Cassonis disloyalty is left unchecked and the BGC tender
offer is no longer a viable option.
C.

The Balance of Hardships Favors Expedited Proceedings


The balance of hardships favors the entry of an order granting Plaintiffs
17

request for expedited proceedings. Defendants breaches of fiduciary duty will


forever deprive GFIs public stockholders of information necessary to make an
informed decision as to whether or not to tender to BGC. And, should existing or
future breaches convince enough stockholders not to tender, or, more critically,
preempt fulfillment of the BGC Board Condition, GFIs stockholders could be
forever deprived of BGCs $6.10 offer. GFIs credit rating will tumble and its
stock price will likely fall as well.
In contrast, Defendants will suffer no undue harm if Plaintiffs are granted
expedited relief. There is no competing offer on the table that will be lost in the
next two weeks. And Plaintiffs are merely asking that Defendants be required to
comply with the fiduciary duties they have blatantly ignored.
REQUESTED RELIEF
Plaintiff respectfully requests that the Court enter a schedule governing
expedited proceedings as follows:
Filing of Plaintiffs Motion for Leave to
File Third Supplement to Complaint
(including draft Supplement)
Updated Document Productions By
Gooch, Heffron, the Special Committee,
and Cassoni
Depositions of Gooch and Cassoni
Filing of Plaintiffs Opening Brief in
Support of Motion for Preliminary
Injunction and/or Trial Brief

February 6, 2015
February 9, 2015
February 11-12, 2015
February 13, 2015

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Filing of Defendants Answering Briefs February 16, 2015


in Opposition to Plaintiffs Motion for
Preliminary Injunction and/or Trial
Brief
Hearing on Plaintiffs Motion for February 17, 2015
Preliminary Injunction and/or Trial
February 4, 2015
BERNSTEIN LITOWITZ
BERGER & GROSSMANN
LLP
Mark Lebovitch
David Wales
Edward G. Timlin
1285 Avenue of the Americas
38th Floor
New York, NY 10019

GRANT & EISENHOFER P.A.


/s/ Mary S. Thomas
Stuart M. Grant (#2526)
Mary S. Thomas (#5072)
123 Justison Street
Wilmington, DE 19801
(302) 622-7070
Co-Lead Counsel for Plaintiffs

Co-Lead Counsel for Plaintiffs


KESSLER TOPAZ MELTZER
& CHECK, LLP
Marc A. Topaz
Lee D. Rudy
Michael C. Wagner
280 King of Prussia Rd
Radnor, PA 19087
(610) 667-7706
Co-Lead Counsel for Plaintiff

PRICKETT, JONES & ELLIOTT, P.A.


Michael Hanrahan (#941)
Paul A. Fioravanti, Jr. (#3808)
Kevin H. Davenport (#5327)
1310 N. King Street
P. O. Box 1328
Wilmington, Delaware 19899-1328
(302) 888-6500
Executive Committee Member

19