An owner of a seat on the New York Stock Exchange has sued to block the NYSE's proposed merger with electronic exchange Archipelago Holdings Inc.

The suit, filed Monday in the New York State Supreme Court, alleges that the deal is skewed in favor of Archipelago to the detriment of the 1,366 seat holders who collectively own the NYSE. The suit charges the directors with a breach of fiduciary duty for failure to act in the best interests of NYSE members, while accusing Goldman Sachs of a conflict of interest in acting as financial adviser to both parties.

"We are not opposed to the merger in principle," William Higgins, the NYSE seat holder who's acting as lead plaintiff in the suit, said in a statement. "It makes good business sense for the NYSE to seek a technology-based trading partner that can move the exchange forward into new platforms and advance new efficiencies." Higgins is president of the Association of NYSE Equity Members Inc.

A NYSE spokesman says, "We have reviewed Mr. Higgins' complaint and find that it is completely without merit. We are proceeding with the merger as proposed."

Disclosed last month, the proposed merger would create a new entity called NYSE Inc., with a value of approximately $4 billion. Current seat owners of the nonprofit NYSE would receive shares in the newly formed company. Under the terms of the merger, 70% of the equity would go to current NYSE members and 30% to Archipelago shareholders.