Global Brokerage (ex-FXCM Inc) builds “mega” defense in “mega” lawsuit

Maria Nikolova

The case, which involves 36 parties, including 19 defendants, slowly moves ahead at the New York Southern District Court, with the counsel for the defendants indicating a huge response to allegations is on its way.

FinanceFeeds has been keeping you up-to-date about the latest courtroom developments involving Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc, after the events from February 6, 2017 led to a wave of legal actions against the broker.

We have dubbed one of these actions a “mega” lawsuit, as it combines four class securities actions, and involves 36 parties, including 19 defendants.

Thus far, we have had information about the plaintiffs and their complaint but we have had no indication of any particular action taken by Global Brokerage (FXCM) with regard to its defense, although the company has pledged that it will “vigorously defend against the claims asserted in these actions”.

The past couple of days, however, have finally delivered some indications on Global Brokerage’s actions in response to the complaint in this “mega” lawsuit. Court documents, seen by FinanceFeeds, point to a “mega” defense being built by the broker.

Israel Dahan of King & Spalding LLP is taking the role of a Counsel for Defendants. The counsel has written to Judge Abrams, assigned to the case, informing him that the firm is representing all 19 defendants in the case: Global Brokerage, Inc. f/k/a FXCM Inc. (“FXCM”), Dror Niv, William Ahdout, David Sakhai, Eduard Yusupov, Janelle G. Lester, Robert Lande, Ornit Niv, Nicola Santoro, Jr., Margaret Deverell, David S. Sassoon, Kenneth Grossman, James Brown, Ryan Silverman, Arthur Gruen, Robin E. Davis, Eric LeGoff, Perry G. Fish, and Bryan Reyhani.

The defendants are gearing up to file a Motion to Dismiss and Memorandum in support of the Motion. Usually, such documents do not exceed 25 pages. King & Spalding LLP, however, requested that they file a document of up to 50 pages, as this will be a single memorandum on behalf of all of the defendants. Apparently, the fight will be complex and the arguments will be detailed.

The Judge has approved the request. We do not know for certain when FXCM’s counsel will file the motion to dismiss and the memorandum in support of the motion, but according to previous court filings, the Motions are due by August 3, 2017 and the Responses are due by September 18, 2017.

The “mega lawsuit” is a federal securities class action on behalf of a class consisting of all persons and entities who acquired publicly traded FXCM securities, including FXCM 2.25% Convertible Senior Notes due 2018 and Class A common stock from March 15, 2012 to February 6, 2017 (the “Class Period”). 683 Capital Partners, LP and Shipco Transport Inc. are lead plaintiffs. The plaintiffs purchased FXCM securities during the Class Period and were damaged when the February announcements were made by US regulators leading to the collapse in prices of these securities.

Under the complaint, FXCM’s failure to properly account for its arrangements with Effex Capital means that all of FXCM’s financial statements issued during the Class Period were false and misleading. Niv, Ahdout, and Lande are alleged to have disseminated or approved false statements and to have “employed devices, schemes and artifices to defraud”.

The complaint also states that the FXCM Notes should not have been introduced into the market because they were objectively unmarketable. “Where, as here, actors introduce an otherwise unmarketable security into the market by means of fraud, they have effectively manipulated the market”, the Complaint says.

Regarding the individual defendants, the Complaint states that each of them “was aware of or recklessly disregarded the fact that the false and misleading statements were being issued concerning the Company; and/or approved or ratified these statements in violation of the federal securities laws”.

The case is “In re Global Brokerage, Inc. f/k/a FXCM Inc. Securities Litigation” (1:17-cv-00916).

Read this next

Retail FX

Spotware rolls out Manager’s API for cTrader brokers

Spotware Systems, a technology provider for the electronic trading industry, has released its new Manager’s API for Brokers, providing powerful tools for server-server integration.

Metaverse Gaming NFT

Dubai Museum taps Binance to jump onto NFT bandwagon

Dubai’s Museum of the Future, the $136 million UAE government-sponsored museum that opened a few weeks ago, is joining forces with Binance NFT to roll out a range of digital products on blockchain.

Digital Assets

Ripple and Lithuanian FINCI partner for XRP-based payments

Ripple is looking to expand its presence in Europe, forming a new partnership with Lithuanian electronic money institution FINCI.

Digital Assets

Crypto.com enables Shopify merchants to accept crypto payments

Crypto.com has integrated with Canadian e-commerce giant Shopify so global merchants can accept crypto payments and save on processing fees through cash-final settlements.

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. 

<