The plaintiffs and the defendants agree that as a matter of practicality and judicial efficiency it is prudent for the Court to stay further proceedings against Dror Niv for a brief period.
About a fortnight after Judge Kimba M Wood of the New York Southern District Court asked the parties in a “Black Swan” case against FXCM Inc, now known as Global Brokerage Inc (OTCMKTS:GLBR), whether the case should be stayed against the individual defendants in the case too, the parties in the case have filed their reply.
On Monday, January 8, 2018, the Retirement Board of the Policemen’s Annuity and Benefit Fund of Chicago, which is a plaintiff in the case, as well as FXCM Inc and Dror Niv, defendants in the case, filed a joint letter with the Court.
The parties disagree from a legal perspective whether the stay applicable to FXCM Inc should be extended to Mr Niv, but they agree that as a matter of practicality and judicial efficiency it is prudent for the Court to stay further proceedings against Mr Niv as well for a brief period. The parties propose that the action against Mr Niv should be stayed by the Court until the earlier of FXCM’s exit from bankruptcy and February 28, 2018.
Let’s recall that the action has earlier been stayed against FXCM Inc, following its filing for bankruptcy under Chapter 11.
The “Black Swan” case, captioned International Union of Operating Engineers Local No. 478 Pension Fund v. FXCM Inc. et al (1:15-cv-03599), 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.
Specifically, the defendants are alleged to have wrongly attributed FXCM’s losses to a once-in-a-lifetime “Black Swan event,” falsely stating that the failure of its banks to provide pricing and a lack of liquidity had caused its customers’ positions to be liquidated at dislocated prices. According to the plaintiffs, the FXCM “flash crash” narrative was a smokescreen.