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

Maria Nikolova

The CFTC has until March 25, 2019, to decide whether to file a brief concerning NFA’s publications about FXCM from February 2017.

Shortly after the United States Commodity Futures Trading Commission (CFTC) asked the Seventh Circuit U.S. Court of Appeals to give it more time to determine its stance in a lawsuit targeting the National Futures Association (NFA), the Court has granted the CFTC request.

In an order entered on February 15, 2019, the Court agrees that the amicus brief of the Commodity Futures Trading Commission, if any, shall be due by March 25, 2019. This means a three-week extension for the US regulator, so that it may decide whether or not to file a brief in which to state its position on the allegations made by Effex Capital, the company involved in FXCM’s US retail FX market exit, against NFA.

Let’s recall that the case is about NFA’s publications from February 2017 related to FXCM.

Effex Capital, LLC brought this action in the United States District Court for the Northern District of Illinois. It alleged 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.

According to Effex, these statements are defamatory, interfere with its business relations, and include confidential and proprietary information. Furthermore, Effex argues that it was deprived of procedural due process because, as a non-party to the settlement and non-member of the NFA, it was unable to participate in the settlement between the NFA and FXCM and did not have the opportunity to contest references to it in the related settlement documents. Effex seeks injunctive relief as well as money damages.

Effex asked for a preliminary injunction; the NFA moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the action. The district court determined that Effex had failed to exhaust its administrative remedies under the Commodity Exchange Act and dismissed without prejudice. The District Court advised Effex to pursue administrative remedies and then seek review of properly exhausted claims. Effex appealed.

On December 4, 2018, the Seventh Circuit U.S. Court of Appeals filed an Order inviting the CFTC to file a brief as “amicus curiae” in this case within ninety days from the date of the order. An amicus curiae is someone who is not a party to a case and is not solicited by a party, but who assists a court by offering information that bears on the case.

When inviting the CFTC’s opinion, the Appeals Court 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,” the Court said back in December.

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