Effex Capital, implicated in FXCM US troubles, targets NFA chief exec in lawsuit

Maria Nikolova

Thomas W. Sexton, President and CEO of NFA, is now among the defendants in a defamation lawsuit brought by Effex Capital against NFA over the complaint and press release issued by the Association against FXCM.

The number of parties in the lawsuit brought by Effex Capital, the company whose name got widely known thanks to the exit of FXCM from the US retail FX market, has just gotten bigger, with the legal action now targeting the top official of the National Futures Association.

According to the latest court filings, seen by FinanceFeeds, the defendants in the case now also include Thomas W. Sexton, President and Chief Executive Officer of NFA, as well as James P. O’Hara, a member of NFA’s Business Conduct Committee.

As FinanceFeeds has previously reported, according to the legal complaint filed by plaintiffs Effex Capital and John Dittami, CEO of Effex, the allegations made by NFA with regard to FXCM’s relations with Effex Capital in the publications on February 6, 2017, are misleading and have caused heavy harm to Effex’s business and reputation.

The amended complaint in the case provides more details as to the particular damage suffered by Effex and its relations with particular companies as a result of the February 6, 2017 events.

More precisely:

  • “Effex has been unable to establish a prime broker relationship and in fact has been denied is requests to establish a prime broker relationship directly by Royal Bank of Scotland, Jefferies Securities and Socgen;
  • Meetings with MXT Global and Blackwell Global were abruptly canceled because such entities stated if they conducted business with Effex they were concerned that NFA or another regulator might target them in a disciplinary proceeding;
  • GCM Prime refused to provide a pricing reference because Saxo Bank advised GCM Prime that they would cease providing liquidity if GCM Prime did business with Effex;
  • Currenex and Fastmatch which provide necessary liquidity to institutional liquidity providers and forex traders terminated Effex’s right to trade on their exchanges immediately following the Narrative.”

In the amended complaint, the plaintiffs explain that they are not complaining about the settlement between FXCM, or the penalties imposed upon FXCM pursuant to that settlement. Instead, the complaint is about what Effex dubs as a “defamatory and injurious manner in which that sanction and underlying settlement was publicly reported”.

Mr Sexton and Mr O’Hara are accused of being responsible for the allegedly defamatory publications. Specifically, following a meeting with FXCM in very late January or very early February 2017, Mr Sexton is said to have stated and insisted that the public reporting of the settlement and sanctions against FXCM includes the statements concerning Effex. Mr O’Hara has signed both the Complaint and the Decision, which predicated to their publication.

Inter alia, Effex requests injunctive relief directing NFA to:

  • (i) remove the NFA Complaint, Decision, Narrative and Press Release from its website or, in the alternative, delete all references to Effex and Dittami in the Narrative, redact Count I from published versions of the NFA Complaint against FXCM, redact in its entirety the third paragraph of the Decision; and
  • (ii) issue a new release stating: (a) NFA did not make any findings against Effex or Dittami; (b) Effex was not functioning as FXCM’s de facto dealing desk; (c) Effex was not controlled by FXCM; and (d) FXCM was not ordered to make any customer restitution.

The summons to Mr Sexton and Mr O’Hara have been sent and executed. Mr Sexton has until August 23, 2017 to answer, whereas the deadline for Mr O’Hara is August 25, 2017.

Read this next

Institutional FX

FX volume drops 13pct at CLS Group in April 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in April.

Crypto Insider, Opinion

Regulation: The Gold-Standard for Crypto-Assets

When the US supervisory authority SEC allowed an investment product referencing Bitcoin futures to be traded for the first time last October, this was widely perceived as a signal that cryptocurrencies had finally become established as an asset class.

Executive Moves

Solid hires FX industry veteran Darren Barker for multi-bank ECN’s business development

His curriculum vitae includes former roles at Cantor Fitzgerald, Sucden Financial, R.J. O’Brien, Jefferies, Natixis, Unicredit, J.P. Morgan, Raiffeisen, RBS International, UBS, Deutsche Bank, and Citi. 

Inside View

Mihails Safro, xpate CEO: Tips sellers need to know to overcome compliance obstacles

The unprecedented growth of e-commerce changed shopping dramatically last year. Many sellers suddenly faced a rapidly growing number of customers who had to stay home during the lockdown. When some clients adopted Netflix and Spotify as part of a daily routine, others ventured into online business. Robinhood alone saw a whopping 6 million rise in user numbers in 2 months. 

Institutional FX

BMLL delivers Level 3 data to Kepler Cheuvreux for order book analytics and algo performance

The solution covers more than 6.5 years of harmonised historical data from 65 venues and combines it with easy to use APIs and analytics libraries in a secure cloud environment. 

Digital Assets

Crypto Is An Invaluable Tool In The Fight Against Financial Oppression  

Crypto has proven itself to be much more than just a hot investment. Indeed, some say it’s poised to play a critical role in the future of finance

Executive Moves

Parameta appoints Head of Benchmark and Indices with a focus on ESG and rates

The firm said building out its benchmarks & indices offering will now be a core priority, with a particular focus on the ESG and rates space.

Digital Assets

WunderTrading brings automated crypto trading to United States

“Among developed countries, Americans are the heaviest users of cryptocurrencies, with 13% having invested in cryptocurrencies over the past year.”

Retail FX

ACY Securities sponsors child safety and family welfare charity Barnardos Australia

Sponsoring Barnardos will give ACY Securities and its employees an opportunity to do volunteer work through different outreach programs.

<