Global Brokerage steps up efforts to have “mega lawsuit” dismissed
Attorneys for Global Brokerage and 17 individual defendants in the case brought by former investors are now requesting an oral argument on the motion to strike and dismiss the consolidated securities class action complaint.
Global Brokerage Inc (NASDAQ:GLBR) has stepped its efforts to have a consolidated securities class action brought against it by former investors dismissed.
The “mega lawsuit” names Global Brokerage, formerly known as FXCM Inc, and 17 individuals, including directors and senior employees at the brokerage accounting department, as defendants. They are accused of fraud, market manipulation and of filing false financial statements with regulators. This is a federal securities class action on behalf of a class consisting of all persons and entities who purchased or otherwise 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”).
On Wednesday, October 18th, the lawyers for Global Brokerage and the individual defendants filed another memorandum with the New York Southern District Court in support of their motion to dismiss the complaint against them.
In the documents, seen by FinanceFeeds, the defendants replied to the Plaintiffs who have argued that the nature of the “order flow” payments agreed between Effex Capital and FXCM was not clear.
The defendants have submitted copies of the March 1, 2010 and the May 1, 2010 Services Agreements between FXCM and Effex. According to the defendants, the Services Agreement was a pay-for-flow agreement based upon trading volume—not a profit sharing agreement. They refer to the March 1, 2010 Services Agreement explicitly stating that “[Forex Capital Markets, LLC] shall receive from Effex a fee equal to $21.00 USD per one million units of Base Currency . . . for the aggregated volume of Transactions executed via the Trading System.” The May 1, 2010 Services Agreement is materially the same in every respect, except that FXCM Holdings, LLC is substituted for Forex Capital Markets, LLC, the lawyers for the defendants explain.
The lawyers for the defendants also argue that the Plaintiffs’ argumentation can be boiled down to one truism: “Because I said so.” The defendants claim that the Plaintiffs’ Complaint is “essentially copied from an unadjudicated regulatory complaint and settlement consent order”. Allegations cribbed from unadjudicated, no-admit no-deny settlements with regulators are not facts, they argue.
If all paragraphs in the Complaint that refer to or rely upon the CFTC Order and NFA Complaint are stricken, there would be virtually no remaining factual allegations, attorneys for the defendants say.
Underlining their efforts to vigorously defend themselves in this action, the defendants are now requesting an oral argument on the motion to strike and dismiss the consolidated securities class action complaint.
The case is captioned In re Global Brokerage, Inc. f/k/a FXCM Inc. Securities Litigation (1:17-cv-00916).