LSEG will face a $175m (£131m) fraud and breach of contract lawsuit brought by the former chief executive of a company it acquired, after a US judge denied the London stock exchange-owner’s attempt to dismiss the case.
LSEG’s subsidiary Refinitiv, which it bought from Thomson Reuters in 2020, acquired US analytics firm Maystreet in 2022 for about $275m after it approached the company with an offer and pledged to integrate LSEG’s global data feeds in Maystreet’s products
The deal also included an earnout provision that could add up to $175m in future payouts to Maystreet executives, depending on the company’s post-acquisition performance.
After the deal closed, Patrick Flannery, the company’s chief executive, alleged that nearly two years passed without the defendants adding any data feeds to Maystreet’s products because of technological incompatibilities. He said the failure to add the feeds caused the firm to miss revenue targets and therefore miss out on the earnout payment.
Flannery filed the lawsuit in Delaware last year against LSEG and its affiliates, Refinitiv US, Latitude Merger Sub, and Maystreet itself, alleging fraud for inducing the sale with false promises and breach of contract for operating in bad faith after closing. He has also alleged that shortly after filing the complaint, LSEG terminated his employment.
LSEG strongly refutes the allegations and filed a motion earlier this year to dismiss both the fraud and breach-of-contract claims.
Case to proceed to trial in the US
However, on Friday, Judge Meghan Adams dismissed LSEG’s application, ruling that Flannery adequately pleaded his claims and that the lawsuit should proceed to trial.
Commenting on the decision, Flannery’s lawyer, Dylan Kletter of Brown Rudnick, said: “We are very pleased that the court rejected every argument that LSEG made for dismissal. Now that both the fraud and contract claims are proceeding, including against LSEG itself, we look forward to discovery and trial.”
When approached by City AM, a LSEG spokesperson said: “LSEG continues to strongly dispute the allegations in this case. At this preliminary stage, the court was required to assume that the plaintiff’s allegations were true. Applying what the court described as a ‘minimal’ burden, the court allowed the case to proceed to discovery.
“We strongly reject the plaintiff’s allegations and are confident the evidence will show that they are unfounded. We will not comment further on pending litigation,” they added.