Global Brokerage to respond to stockholders accusations in “Black Swan” case on Nov 17, 2017

Maria Nikolova

Judge Kimba M. Wood has granted the request of KING & SPALDING LLP, representing FXCM Inc, now known as Global Brokerage Inc, and its former head Drew Niv, to file a longer reply brief on November 17th.

Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc, is showing firmness in its legal fight against stockholders’ allegations that it abused the “Black Swan” label for the events from January 15, 2015 to cover up its own misconduct.

The case, captioned International Union of Operating Engineers Local No. 478 Pension Fund v. FXCM Inc. et al (1:15-cv-03599), is a securities fraud class action brought on behalf of all purchasers of FXCM common stock between March 17, 2014 and January 20, 2015. When FXCM’s and Drew Niv’s alleged misrepresentations were revealed and the information once concealed from the market was unravelled, the price of FXCM’s securities significantly declined, causing investors’ losses. The Defendants’ conduct is said to have caused an economic loss to the Plaintiff and the Class.

The defendants continue to oppose the allegations. On Wednesday, Judge Kimba M. Wood of the New York Southern District Court granted their request to file a longer than typical reply brief on November 17, 2017. FXCM’s lawyers have asked about such extensions of document length before, as they need to adequately reply to the numerous arguments raised by the plaintiffs.

The plaintiffs insist that the January 15, 2015 events were not ones of low-probability and that the risk of loss to FXCM was both known to and discussed by the defendants, as shown by the testimony of operations manager Paresh Patel who raised the issue of increasing margins with Mr Niv as its competitors’ customers flocked to FXCM to take advantage of its more generous (and risky) margin requirements, but Mr Niv declined to do so. One of the confidential witnesses in the case also said that he had issued a similar warning to Mr Niv’s subordinate Brendan Callan, head of FXCM’s European operations.

Excerpt from a conversation between Paresh Patel and Sal Levato – January 16, 2015.

The plaintiffs also emphasize the importance of the new evidence that has come to light only recently and the events from February 2017, when the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) published proceedings against FXCM and Mr Niv.

Rather than contest the allegations made in these proceedings, defendants chose to settle them, the plaintiffs stress. FXCM and Mr Niv have noted that “the CFTC Consent Order is a ‘no-admit no-deny’ settlement with no evidentiary value,” and that the Court should draw inferences in their favor from the fact that the CFTC did not make certain allegations. The plaintiffs note that they rely on testimony and documents produced by the defendants to the CFTC, instead of the findings in the Consent Order.

Read this next

Institutional FX

Fiserv secures major payment institution licence in Singapore

Brookfield-based financial services technology provider Fiserv Inc has obtained nod for a Major Payment Institution license in Singapore.

Institutional FX

Finalto expands NDFs line-up with Taiwanese dollar

Finalto announced today that it has expanded its non-deliverable forwards (NDFs) offering with the addition of Taiwan’s dollar to its trading platform.

Opinion

It’s time for FX to Harness Crypto’s Potential

Jonathan Cumberlidge, FX Sales Director for BVNK, makes the case for cryptocurrencies in improving the efficiency and flexibility of foreign exchange trading.

Digital Assets

Owner of OptionMint, OptionKing, and OptionQueen gets 30 months in prison

A US federal judge has sentenced Ohio resident Jared Davis, who was found guilty for his participation in a multi-million fraud scheme carried out by Israeli-run binary options websites.

Executive Moves

iS Prime co-founders Raj Sitlani and Jonathan Brewer leave, but “business as usual”

“For our clients and teams at iS Prime, iS Risk and iS Prime Hong Kong, it is business as usual. We will be increasing our investment in our technology and staff, putting our clients first as we drive the business forwards to maintain our market leadership position.”

Digital Assets

Germany-focused DekaBank taps METACO for digital asset custody offering

“Digital assets are a critical part of the future, a radical new way for how assets will be represented, from currencies to real estate.”

Technology

Eventus launches AML solution for TradFi and digital asset space

“Firms operating in traditional financial markets and digital assets alike are facing greater challenges than ever to protect themselves from those presenting a risk to their businesses and reputations, along with their standing with government regulators.”

Industry News

Qomply launches direct-to-FCA trade report solution that bypasses ARM

“Certainly, for back-reporting large volumes of data, QomplyDirect removes extra ARM fees by offering the flexibility of sending reports directly to the FCA via a firm’s own infrastructure.”

Executive Moves

BNP Paribas AM appoints Geoff Dailey as Deputy Head of US Equities

“Geoff has more than 20 years’ experience in the industry and as a key, senior member of the team with a strong investment pedigree and leadership profile, he is the natural successor for Pam.”

<