Ex-FXCM clients do not want to arbitrate disputes with broker
The former customers of FXCM say that the provisions in the contractual agreements that should compel arbitration are invalid.
Former customers of FXCM Inc, now known as Global Brokerage Inc (NASDAQ:GLBR), are seeking to rebuff claims by the broker that contractual agreements it had with its customers compel arbitration of all disputes and that their class action against the company and its (former) executives should not be allowed to proceed.
In their second amended complaint, filed with the New York Southern District Court on November 27, 2017, former customers of FXCM Inc, FXCM Holdings and Forex Capital (collectively referred to as “FXCM”), sought to rebut claims by the broker against a class-wide prosecution.
The plaintiffs seek to certify a nationwide class that includes all customers of FXCM who, between March 1, 2010 and February 6, 2017, placed trade orders through FXCM’s “No Dealing Desk” (“NDD”) platform while FXCM publicly maintained that FXCM had no conflict of interest in the outcome of that trade. In their previous complaint against the broker, the clients sought to certify a number of other classes, including “New York Class”, “California Class”, “Wisconsin Class”, “Oregon Class”, “South Carolina Class”. In the complaint filed on Monday, the list of classes seeking certification is reduced to “Nationwide Class”, “New York Class”, and “California Class”.
The FXCM defendants claim to have contractual agreements with the plaintiffs and other members of the proposed classes which require the plaintiffs and members of the proposed classes to arbitrate all disputes. According to the defendants, the contractual agreements prevent class-wide prosecution of plaintiffs’ claims pursuant to a class action waiver provision.
The former customers of the broker dispute this claim and assert that the purported provisions allegedly requiring arbitration and preventing a class-wide remedy are invalid because of a lack of valid consideration, because there was no meeting of the minds, because they are unconscionable and because they are against public policy.
The case, captioned Nguyen v. FXCM Inc. et al (1:17-cv-02729), targets Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc, Forex Capital Markets LLC, Global Brokerage Holdings, Drew Niv, William Ahdout, Effex Capital and John Dittami. The action accuses the defendants of, inter alia, breaches of fiduciary duty and duty of best execution, the aiding and abetting thereof, breach of contract, breach of the implied covenant of good faith and fair dealing, gross negligence, unjust enrichment, and violations of the Commodities Exchange Act, 7 U.S.C. § 1 et seq.
