Global Brokerage manages to secure partial dismissal of “mega lawsuit”
The New York Southern District Court partially granted and partially denied the broker’s motion to dismiss the complaint filed by investors in the public securities of FXCM Inc.
There is an update on the “mega lawsuit” against Global Brokerage Inc (OTCMKTS:GLBR), formerly known as FXCM Inc, from the New York Southern District Court, where an oral argument in the case brought by investors in the public securities of the company was held earlier today.
Information is scarce at this point but what is clear is that the Judge Ronnie Abrams partially granted and partially denied the defendants’ motion to dismiss the case.
The Court denied FXCM’s motion to the degree that it concerns the allegations against the broker made in the regulatory settlements from February 2017 with the United States Commodity Futures Trading Commission and the National Futures Association.
Let’s recall that the broker had wanted the Court to strike all allegations in the plaintiffs’ Complaint that refer to, or rely upon, the allegations contained in the unadjudicated CFTC Order and NFA Complaint. In short, the broker had claimed that the plaintiffs had inappropriately cribbed the entirety of their purported factual allegations from the unadjudicated CFTC Order and NFA Complaint, which were said to be insufficient to support the plaintiffs’ claims. The Court today disagreed with the broker in this respect.
However, FXCM Inc and a number of its former and current top officers managed to secure a win when it comes to the rest of their Motion to Dismiss. That is, the Court agreed that FXCM’s NDD statements are not misleading. Let’s note that the company’s statements started with “we believe” the NDD model “aligns our interests with those of our customer,” thus merely meaning, according to the defense, that the company was expressing its opinion.
The Court also agrees that the plaintiffs have not managed to prove scienter against FXCM.
This is not the end to the case, as the plaintiffs are granted leave to amend, and they must file their amended complaint by April 6, 2018. Defendants shall have until May 7, 2018, to file their response.
The so-called “mega lawsuit” is a class action on behalf of investors in the public securities of FXCM Inc. A putative class consists of all persons and entities who purchased or otherwise acquired publicly traded FXCM securities from March 15, 2012 to February 6, 2017.
The complaint alleged that FXCM misled its clients, investors and the regulators by claiming that the company’s “No Dealing Desk” (NDD) platform would provide its customers with a Forex trading platform that was free of conflicts of interest. As a result of the investigations by the CFTC and NFA, the allegations and penalties announced in February 2017, the price of FXCM’s stock dropped sharply, losing more than half of its value and damaging investors.
The complaint also alleged that each of the individual defendants directly participated in the management of the company and was aware of or recklessly disregarded the fact that the false and misleading statements were being issued concerning the company.
The case is captioned In re Global Brokerage, Inc. f/k/a FXCM Inc. Securities Litigation (1:17-cv-00916).