Effex Capital, embroiled in FXCM’s US exit, gets more time to respond to NFA arguments

Maria Nikolova

Effex, which seeks $10 million from NFA over alleged damage caused by the announcement about the disciplinary action against FXCM, gets more time to prepare its response.

A public announcement about a disciplinary action against a Forex broker may result in a variety of consequences, including litigation. This has been proven by the case launched by Effex Capital and its CEO John Dittami against the National Futures Association (NFA) following the publication of several documents concerning the disciplinary action taken against FXCM back in February 2017. Effex’s relations with FXCM played a crucial role in the regulatory decisions concerning the broker, which agreed to ultimately exit the US retail Forex market.

What do Effex and its CEO want? An award of $10 million over alleged damage caused to them by the announcement, as well as removal or editing of the materials concerning the said action against FXCM.

But the Illinois Northern District Court dismissed the case in April this year, saying that Effex should have exhausted all other means of solving the disagreement it had with NFA, including taking the matter to the CFTC.

Effex appealed from the ruling and the appeal case now proceeds at the Seventh Circuit U.S. Court of Appeals. In fact, if we consider the latest court filings, the whole story is becoming more and more complicated, even by the admission of Effex Capital itself.

On Friday, October 12, 2018, Effex asked the Court for more time to prepare its response to NFA’s brief. NFA, as expected, has argued that the District Court’s ruling must be confirmed and that Effex should take the matter to the CFTC instead of suing NFA. Effex sees the matter as more complicated.

In fact, in the Letter in which Effex asks for extra time to prepare its response, Effex’s counsel argues that:

“The extension of time to file Effex’s reply brief is requested based upon arguments raised by NFA in their opening brief which in effect equate to a cross-appeal in an already complex matter”.

“Due to the time I have had to devote to researching the arguments raised by NFA which in essence equate to a cross-appeal, in addition to addressing the counterarguments in their brief I cannot reasonably prepare an adequate brief by the October 24, 2018 deadline, even proceeding with all due diligence”.

The key phrase here is “cross-appeal”. Effex’s counsel does not elaborate on which statements in NFA’s brief amount to “cross-appeal”. In fact, the single time that NFA mentions these words in its brief is to say that “No cross-appeal is necessary…”.

Let’s recall that NFA’s Decision found one set of violations that stemmed from FXCM’s dealings with Effex: FXCM advertised that it used a “No Dealing Desk” model – using an independent liquidity provider to execute trades – that eliminated a potential conflict of interest between FXCM and customers. NFA’s Decision found that FXCM directed trades to Effex, which “was purportedly independent” but which FXCM actually supported and controlled through various means. It also found that FXCM allowed Effex to engage in execution tactics that were abusive to FXCM’s customers – Hold Timer and Previous Quote.

Also on February 6, 2017, the CFTC issued its own decision concerning FXCM. The CFTC made materially identical findings to NFA’s. The CFTC called Effex “HFT Co” but quoted a 2012 post from Forex Factory, which identifies Effex by name.

On Friday, October 12, 2018, Effex got the requested time extension it had requested. The Court agreed that the appellant’s reply brief is due on or before November 14, 2018.

The case is captioned Effex Capital, LLC, et al v. National Futures Association, et al (0:18-cv-01914).

Read this next

Digital Assets

TON Foundation teams up with HashKey on fiat access for Telegram Wallet

The TON Foundation, a collective of developers behind The Open Network (TON) blockchain, has entered into a strategic partnership with digital asset financial services firm HashKey Group.

blockdag

BlockDAG aka Kaspa’s Toughest Competitor Releases DAGpaper, Lightes Up The Las Vegas Sphere Pulling Shiba Inu Investors & Amassing $16.4M in Presale

BlockDAG, emerging as a Kaspa competitor, unveils its DAGpaper, spotlighting the Las Vegas Sphere and captivating Shiba Inu investors with a $16.4M presale success.

Fundamental Analysis

Global FX Market Summary: USD, ECB, Gold, Oil  April 12 ,2024

A strong US economy, cautious Fed policy compared to Europe, and safe-haven demand are all fueling the surge of the US Dollar.

Digital Assets

Thai crypto exchange Bitkub eyes $3 billion valuation

Thailand’s largest cryptocurrency exchange Bitkub is gearing up for a public offering next year with a potential valuation of up to $3 billion, according to Bitkub Capital Group CEO Jirayut Srupsrisopa.

Technical Analysis

GBPUSD Technical Analysis Report 12 April, 2024

GBPUSD currency pair can be expected to all further toward the next support level 1.2400, target price for the completion of the active minor impulse wave.

Market News

Navigating Currency Trends: Extensive Analysis on EUR/USD Signal

Traders Union provides comprehensive daily analysis and signals for EUR/USD.

Retail FX

Axi extends sponsorship of Brazilian Esporte Clube Bahia

Forex and CFD broker Axi has just announced they’re extending their sponsorship with Brazilian Serie A team Esporte Clube Bahia into the 2024 season.

Digital Assets

Binance-backed Gopax narrows losses amid strong crypto trading

Binance-backed cryptocurrency exchange Gopax reported lower net losses for 2023, according to its parent company Streami’s year-end financial report.

Chainwire

99Bitcoins Launches Learn-To-Earn Presale and Raises $150K On First Day

99Bitcoins, established in 2013, has recently begun its token presale in an effort to harness the current upward trend in Bitcoin’s value. The 99BTC team, seizing this opportunity, offers its learn-to-earn platform, a longstanding resource in cryptocurrency education.

<