CFTC wants TFS-ICAP senior managers to respond to complaint in flying & printing case

Maria Nikolova

In response to the CFTC’s request, New York Judge gives Dibb and Woolfenden several days to respond to the complaint in the case.

Jeremy Woolfenden, former Global Head of Emerging Markets broking at TFS-ICAP, and Ian Dibb ex-CEO of TFS-ICAP, are under increased pressure to respond to the complaint launched by the United States Commodity Futures Trading Commission (CFTC) against them at the New York Southern District Court.

The CFTC Complaint alleges that, from approximately 2008 through 2015, brokers at TFS-ICAP offices in the United States and the United Kingdom attempted to deceive and deceived their clients by engaging in the practices of communicating to them fake bids and offers and fake trades in the foreign exchange options market. The CFTC Complaint alleges that the practices, known as “flying prices” and “printing trades”, were a core part of TFS-ICAP’s broking business.

Now, the CFTC believes that Dibb and Woolfenden have to officially respond to the complaint in this matter.

Counsel for the CFTC has written to the Court to request that the court set a deadline for Defendants Dibb and Woolfenden to answer the complaint in this matter. Specifically, three weeks after receiving the CFTC’s responses to their pre-motion letters, neither defendant has notified the court in writing of his intention to proceed with a motion to dismiss.

Judge Victor Marrero agreed with the CFTC and today issued an order directing the defendants to respond by 3/21/2019, by letter not to exceed three pages, to the matter set forth by the plaintiff.

Let’s recall that, according to the CFTC, the New York Southern District Court has personal jurisdiction over Mr. Woolfenden because his actions caused the underlying misconduct at issue in this case. TFS-ICAP brokers made misrepresentations to US-based clients because they had been trained and encouraged to do so by Mr. Woolfenden. Though Mr. Woolfenden lived in London, as the Global Head of Emerging Markets FX Options he directly supervised and managed these US- and London-based brokers through at least mid-August 2015. Moreover, he registered with the CFTC in the United State as an associated person of two CFTC-registered entities.

Furthermore, the CFTC argues that the conduct at issue in this case – flying prices and printing trades to US-based clients – is a direct result of Mr. Woolfenden’s own actions. The Complaint alleges that in 2008, Woolfenden introduced the practices of flying and printing to US-based brokers. Specifically, he pressured existing US management at the time to adopt the deceptive practices, stripped them of responsibilities when they resisted, and installed a new manager who would comply. Moreover, Mr. Woolfenden took it upon himself to teach the practices to US-based supervisees.

Regarding Mr Dibb, the CFTC argues that the Complaint contains allegations sufficient to draw a reasonable inference that he knew or, at the very least, “consciously avoided” knowledge that TFS-ICAP brokers flew prices and printed trades to US-based clients or was “willfully blind” to such conduct. The Complaint alleges Mr. Dibb (1) flew prices and printed trades himself before he was CEO; (2) heard London brokers on the floor talk about flying and printing while he was CEO; and (3) on at least one occasion, in 2014, received an email from a New York broker expressing concern about printing trades in a regulated market. Furthermore, the Complaint alleges that Mr Dibb did not implement any policies or procedures-either in New York or London-to deter or detect these deceptive practices. Collectively, these allegations are seen as more than adequate by the CFTC to plead conscious avoidance.

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