FXCM continues legal fight, seeks to dismiss amended investor class complaint in Delaware Court
The debates around the Brett Kandell v. Dror Niv et al. case continue in the Delaware Chancery Court.
Recently, due to the rapid developments around FXCM’s exit from the US market, eyes have been focused mostly on the legal action against the broker and its management with regards to February 2017 events. However, there have been other lawsuits that the broker is involved in too, one of the most prominent being that filed by Brett Kandell back in December 15, 2015.
The case, captioned Brett Kandell v. Dror Niv et al. (11812-VCG), represents a shareholder derivative complaint against the members of the Board of Directors of FXCM Inc, now known as Global Brokerage Inc (NASDAQ:GLBR). The list of defendants also includes William Ahdout and Kenneth Grossman, with the latter being the new CEO of Global Brokerage.
What is the complaint about? On March 4, 2016, the plaintiff filed an amended shareholder derivative complaint, which alleges breach of fiduciary duty, contribution and indemnification, waste of corporate assets, abuse of control and unjust enrichment and seeks compensatory damages, rescission of certain agreements as well as reasonable costs and expenses. Since then, the plaintiff has filed a number of amended complaints. The Board of FXCM, in its turn, filed a motion to dismiss on October 17, 2016.
Yesterday, the investors sought the court to approve another set of amendments, according to a report by Law360. FXCM’s attorneys argued against it, based on the fact that rules governing the fully briefed and pending dismissal motion bar the changes.
The court has yet to rule on the motion to dismiss.
The case Brett Kandell v. Dror Niv et al. is related to the events of January 15, 2015 and the FXCM directors’ business practices that allegedly contributed to shareholder, client losses and the heavy meltdown as a whole. The case may unofficially be called “the dog that did not bark” case, as during earlier hearings, the phrase was used by FXCM’s attorney Kenneth J. Nachbar of Morris Nichols Arsht & Tunnell LLP to describe the attitude of US regulators with regards to FXCM business practices.
In response to the Vice Chancellor to provide evidence that regulators never flagged the company for its advertising practices and investor assurances of loss limits, Mr Nachbar said, “It’s the dog that didn’t bark.”
“It’s not my burden to put in evidence that regulators sat by idly,” he said.
Meanwhile, FXCM faces a number of class action securities lawsuits over the February 2017 events. Four of these have been combined and FXCM has until early August to answer.
