Automatic stay of legal proceedings against Global Brokerage ends
Given the latest developments around Global Brokerage’s Chapter 11 case, the automatic stay of the legal proceedings against the company is lifted.
As FinanceFeeds reported earlier today, Global Brokerage Inc (OTCMKTS:GLBR), formerly known as FXCM Inc, has submitted a notice of entry of order confirming its prepackaged plan of reorganization and the occurrence of the effective date of the plan. The Effective Date of the Plan occurred on February 8, 2018 and, as a result, the Plan has been substantially consummated.
The entry of the plan into effect triggers a raft of consequences, including the lifting of the automatic stay of legal proceedings against the Debtor. In particular, the Counsel for Global Brokerage has already informed the Judges assigned to two of the cases against the broker about the termination of the automatic stay.
Today, the Counsel for Global Brokerage informed the Honorable Ronnie Abrams, assigned to the case “In re Global Brokerage, Inc. f/k/a FXCM Inc. Securities Litigation” about the end of the stay. The case is also known as the “mega lawsuit”.
The action is brought on behalf of a putative class consisting of all persons and entities who purchased or otherwise acquired publicly traded FXCM securities from March 15, 2012 to February 6, 2017. The complaint alleges that FXCM misled its clients, investors and the regulators by claiming that the company’s “No Dealing Desk” (“NDD”) platform would provide its customers with a Forex trading platform that was free of conflicts of interest. As a result of the investigations by the CFTC and NFA, the allegations and penalties announced in February 2017, the price of FXCM’s stock dropped sharply, losing more than half of its value and damaging investors.
Also today, the Counsel for Global Brokerage informed Honorable Kimba M. Wood, assigned to the case “International Union of Operating Engineers Local No. 478 Pension Fund v. FXCM Inc. et al”, of the lifting of the stay. This case targets Global Brokerage and Drew Niv. The case at hand is a securities fraud class action brought on behalf of all purchasers of FXCM common stock between March 17, 2014 and January 20, 2015. During the Class Period, Plaintiff and the Class purchased FXCM securities at allegedly artificially inflated prices. When FXCM’s and Niv’s alleged misrepresentations were revealed and the information once concealed from the market was unravelled, the price of FXCM’s securities significantly declined, causing investors’ losses. The Defendants’ conduct is said to have caused an economic loss to the Plaintiff and the Class.
The plaintiffs allege that Defendants’ narrative about FXCM being the innocent victim of a “Black Swan” in January 2015 event is just a fiction designed to cover-up fraudulent misconduct.
Other legal actions set to be affected by the lifting of the automated stay of the proceedings include the action taken by former clients of the broker who claim to have been caused damage as a result of FXCM’s claims about its NDD model. The action accuses the broker and a number of its executives of, inter alia, breaches of fiduciary duty and duty of best execution, the aiding and abetting thereof, breach of contract, breach of the implied covenant of good faith and fair dealing, gross negligence, unjust enrichment, and violations of the Commodities Exchange Act, 7 U.S.C. § 1 et seq.
