Court grants CFTC more time to decide on its stance in FXCM publications case

Maria Nikolova

The Seventh Circuit U.S. Court of Appeals gives the CFTC more time to decide on its position in a case concerning NFA’s publications about FXCM from February 2017.

The United States Commodity Futures Trading Commission (CFTC) has secured the second extension of time it has requested in order to determine its stance in a lawsuit targeting the National Futures Association (NFA). 

The lawsuit, concerning publications about regulatory actions against FXCM from February 2017, has been filed by Effex Capital, which has been embroiled in FXCM’s exit from the US retail FX market. Effex Capital alleges that NFA committed a raft of state law torts, violated the Illinois Trade Secret Act, and violated the Fifth Amendment’s Due Process Clause through its actions regarding a settlement between the NFA and its member Forex Capital Markets, LLC (FXCM). In particular, Effex claims that the NFA made false and misleading statements about it in four NFA documents relating to the FXCM settlement: a Complaint, a Decision, a Narrative of the Decision, and a Press Release.

After the Illinois Northern District Court sided with NFA and dismissed the case in April 2018, Effex appealed, taking the case to the Seventh Circuit U.S. Court of Appeals, where it is pending now. In order to determine its ruling, the Appeals Court has asked the CFTC to have its say via the so-called file a brief as “amicus curiae”, a friend to the court, who is not a party in the case.

The CFTC, however, appears to need more time than that originally granted by the Court to decide on whether it will file such a document. On March 21, 2019, the Court agreed to grant the CFTC another time extension to determine its stance. The amicus brief of the Commodity Futures Trading Commission, if any, shall be due by April 8, 2019, the Court said.

Let’s recall that, when the Appeals Court invited the CFTC to voice its stance in this case, it noted that the District Court premised its dismissal on a variety of possible avenues that Effex could have taken to seek review of the NFA’s actions by the CFTC.

“Having studied the briefs and the record and having heard oral argument, the court has determined that, in deciding this appeal, it would benefit greatly from the view of the CFTC as to whether a non-party such as Effex can seek review of an NFA disciplinary procedure or otherwise seek redress before the Commission.”

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