Effex Capital, involved in FXCM’s US exit, challenges Appeals Court ruling in NFA case

Maria Nikolova

Effex Capital challenges the Appeals Court’s decision from August this year, when the Court sided with NFA over the content of press releases concerning FXCM.


As FinanceFeeds has reported, Effex Capital, which was embroiled in FXCM’s exit from the US retail FX market, in August lost its appeal in a lawsuit targeting the National Futures Association (NFA). According to Effex Capital, NFA had defamed it in documents related to a settlement between the NFA and FXCM. The Court of Appeals sided with the District Court in that Effex Capital had not exhausted all administrative remedies available to it before taking NFA to Court.

On September 17, 2019, Plaintiffs-Appellants Effex Capital, LLC and its CEO John Dittami filed a petition for a rehearing en banc.

According to the appellants, the Panel failed to recognize that their state law claims do not require any modifications to the February 7, 2017 decision issued by NFA in its disciplinary action relating to FXCM given: (i) that Appellants’ due process claims challenged the procedures utilized by NFA in the Disciplinary Action; and (ii) NFA’s position that Appellants’ state law claims challenged the Consent Order.

Further, according to Effex, the Panel’s holding also overlooked a basic principal of statutory construction which requires the Court to presume Congress acted intentionally and purposely in enacting laws, since 7 U.S.C. § 2(a) expressly states the extent of Commodity Futures Trading Commission’s (CFTC) jurisdiction and contains a savings clause preserving the right to prosecute claims in both federal and state courts. Effex insists that 7 U.S.C. § 2(a) leaves no room for inference and unequivocally shows Congress did not intend to preempt Appellants’ state law claims.

If the Decision is not reversed,the Appellants say, “the Panel has effectively licensed Self-Regulated Organizations (SRO) to act tortiously with impunity by publishing false and defamatory statements about non-parties under the guise of bona fide disciplinary proceedings against an actual SRO-member”. Effex goes even further by stating that the Panel’s decision, places non-NFA-member, non-parties in the impossible predicament of being unable to obtain recompense because it: (a) overrides the savings clause; and (b) NFA, unlike CFTC, is not subject to statutory claims like the federal government.

Let’s recall that, in its initial lawsuit against NFA, Effex sought injunctive relief, asking for an order requiring the NFA to remove the FXCM Settlement Documents from its website, to delete all references to Effex, or, alternatively, to provide Effex with a “name clearing hearing.” It further requested an order compelling the NFA to “issue a new press release stating: (a) NFA did not make any findings against Effex or Dittami; (b) Effex was not a de facto dealing desk of FXCM; (c) Effex was not controlled by FXCM; and (d) FXCM was not ordered to make any customer restitution.” Effex also asked for money damages of $10,000,000 for lost profits and to redress its constitutional injury.

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