Global Brokerage’s stockholder Ryan Spaulding abandons lawsuit against ex-officers
The plaintiff did not specify the motives for his decision to dismiss the complaint against 13 former and current directors and officers of Global Brokerage.
Less than a month after filing his complaint against some of the top-ranking officers and directors of Global Brokerage Inc (OTCMKTS:GLBR), formerly known as FXCM Inc, Ryan Spaulding, a stockholder of the broker has informed the New York Southern District Court of his decision to dismiss the case.
Earlier this week, the plaintiff gave a notice of voluntary dismissal without prejudice, subject to Rule 23.1(c) of the Federal Rules of Civil Procedure. The motives for the decision have not been specified. The defendants and their counsel have not appeared in this action and no responsive pleading has been served, the Court documents say.
Let’s recall that the case targeted Dror Niv; William Ahdout; James G. Brown; Robin E. Davis; Kenneth Grossman; Arthur Gruen; Robert Lande; Eric LeGoff; Janelle G. Lester; David Sakhai; Ryan Silverman; Eduard Yusupov, and Bryan Reyhani. Global Brokerage was a nominal defendant in the case.
The plaintiff outlined measures to remedy the situation at the company. He had asked the Court to direct FXCM to take all necessary actions to reform and improve its corporate governance and internal procedures to comply with applicable laws, including putting forward for stockholder vote resolutions to amendments to the company’s By-Laws or Articles of Incorporation.
The individual defendants were accused of waste of corporate assets, breach of fiduciary duty and unjust enrichment.
In particular, the complaint referred to the events from January 15, 2015; the deal with Leucadia National Corp. (NYSE:LUK); the actions of the US regulators from February 2017; and the filing by Global Brokerage Inc for bankruptcy.
According to the complaint, the Board was responsible for FXCM’s violation of Regulation 5.16 by allowing FXCM to illegally make guarantees against losses to the company’s retail FX customers.
Regarding the events from February 2017, when the NFA and the CFTC exposed FXCM’s undisclosed relationship with Effex Capital and challenged the Non Dealing Desk business model of the broker, the complaint notes that these developments hit the market capitalization even further taking it down to $19 million.
In addition to the severe market capitalization loss, the actions of the individual defendants are also said to have caused other damage to the broker. They have damaged the reputation of the company, thus impairing its ability to raise equity capital or debt. Moreover, according to the complaint, the broker continues to pump significant sums of money into class action lawsuits, expenses associated with the waiving of negative customer balances, and the costs for compensation to the defendants who have actually breached their duties to FXCM.
The case, captioned Spaulding v. Grossman et al (1:18-cv-02461), is now officially terminated.