Nymex Cuts Optionable Tie

The New York Mercantile Exchange (NMX Quote) is "reviewing" developments at its beleaguered gas brokerage affiliate, Optionable (OPBL Quote).

A parade of negative news led to Monday's resignation of Optionable CEO Kevin Cassidy. Nymex said it gave up its Optionable board seat and will take a hard look at its investment in the electronic broker.

The statement issued by the Nymex this morning indicates that the commodities trading company is "actively reviewing the situation." A Nymex spokeswoman didn't specify what actions, if any, the exchange might take involving its relationship with Optionable or to discuss what its review might entail.

Nymex paid at least $29 million for 19% stake in Optionable back in April and as a part of that deal put one of its execs, Ben Chesir, on Optionable's board.

A Nymex spokeswoman says Chesir has stepped down from the energy broker's board as Nymex conducts its review in order to address any possible "conflicts of interest."

Nymex also has warrants to more than double its stake in Optionable, but those options are well out of the money. They are struck at $4.30 a share -- nine times the recent trading price of Optionable shares.

Optionable, which lost more than three-quarter of its value last week, fell 54 cents Monday to 47 cents.

Nymex's investment in Optionable was believed to have been a big vote of confidence in the Valhalla, N.Y.-based energy broker. But the fallout from big losses that Optionable's largest client, BMO Financial(BMO Quote), combined with Nymex's move to launch its own electronic service, has crushed the broker's business.

The Nymex service is expected to launch next month.

A Nymex spokesman declined to say who at Nymex would be conducting the review or to provide a timetable for its investigation.

Issues continue to mount at Optionable. Late last Friday, law firm Sarraf Gentile announced that it had launched a class-action securities fraud suit in the U.S. District Court for the Southern District of New York. The suit names as defendants Optionable and some of its top executives. In a statement, Helmig said, "in my new and expanded role as executive chairman I am going to assess the situation and guide the company accordingly."