Hearing in US lawsuit against AFX gets rescheduled again

Maria Nikolova

The hearing on the sanctions motion launched by the Chapter 11 Trustee of the estates of Avenica and Gallant Capital Markets was rescheduled to November 15, 2019.

The legal action launched by the Chapter 11 Trustee of the jointly administered estates of Avenica, Inc. and Gallant Capital Markets, Ltd. against AFX Capital Markets Ltd., AFX Capital U.S. Corp. and STO Super Trading Online is set for further delay, as shown by the latest filings with the New York Eastern Bankruptcy Court.

On October 22, 2019, the firm representing Esther DuVal, in her capacity as the Chapter 11 Trustee for Avenica and Gallant Capital Markets, submitted a Letter at the Court informing that the hearing on the sanctions motion against AFX is adjourned.

The document states:

“This letter is to confirm the adjournment of the pre-trial conference in the above-mentioned adversary proceeding and the hearing on the Trustee’s sanctions motion, per the Court’s direction, from Thursday, October 24, 2019 at 10:00 a.m. to Friday, November 15, 2019 at 9:30 a.m.”

Let’s recall that, under the Complaint against AFX, throughout 2015 and 2016, Gallant deposited approximately $2.35 million (for its benefit) into a Gallant account maintained at AFX. Within the two-week period prior to Gallant’s commencement of its bankruptcy case, there was a balance of approximately $2.4 million in the Gallant account at AFX. Around that time, Gallant made multiple demands upon Defendants for the turnover of Gallant’s funds—all of which were disregarded.

AFX withdrew the remaining balance, without authorization and without basis, on the Filing Date—in violation of the automatic stay. This case involves core issues whereby the Trustee is seeking a turnover of Gallant property and recovery of assets of the Gallant estate, and enforcement of the automatic stay.

On October 15, 2019, the Counsel for AFX admitted that they had been unable to reach AFX or its officers either through email or phone due to the administration and regulatory proceeding. The defendants’ counsel asked the Court to hold in abeyance their reply to the Trustee’s motion for sanctions.

On October 16, 2019, Joseph S. Maniscalco, representative of the Trustee, submitted a response to the Letter filed by AFX’s Counsel. The Trustee requested that the Court deny the request of the AFX Defendants and proceed with the hearing on the Sanction Motion.

The request by the AFX defendants, according to the Trustee, is only further proof of the delay tactics and bad faith behavior by AFX that has plagued the proceedings (for instance, the multiple misrepresentations to Trustee’s counsel and the Court about the pending payments under the stipulation of settlement and the current status of AFX defendants).

“Upon information and belief, counsel for AFX Defendants have known for months of their clients’ alleged shutdown, but failed to advise the Court until now”, the Trustee’s representative said. Joseph S. Maniscalco urged the Court not to give the AFX defendants “another opportunity to make misrepresentations and delay this Adversary Proceeding”.

Judging from the latest Court developments, there are more hurdles for the progress of the lawsuit, as the adjournment marks yet another delay in the proceedings.

Read this next

Industry News

The B2Broker B2Core REST API Is Now Live

B2Broker has announced the release of its new REST API, which lets customers use B2Broker’s solutions and services for business purposes.

Executive Moves

CME Group taps Paul Woolman to lead Equity Index, Giovanni Vicioso to lead Crypto

“Our equity and cryptocurrency businesses have experienced tremendous growth in recent years, underpinned by strong customer adoption and continued innovation.”

Technology

Sumsub launches document-free KYC for users in India, Brazil, Nigeria and Indonesia

Sumsub has launched one click-KYC for users in India, Brazil, Nigeria and Indonesia in a move that allows businesses to instantly onboard over 2 billion users without requesting their ID documents.

Digital Assets

Cboe becomes first major global exchange operator on DeFi data platform, Pyth Network

“Our participation in the Pyth network will provide another avenue to broaden customer access to our data, and aligns with our strategy to deliver market data to investors around the globe based on how they want to consume their data, whether through direct connectivity methods, the cloud or the blockchain.”

Industry News

FINRA fines Barclays Capital $2 million for best execution failures for 5 years

FINRA has fined Barclays Capital $2 million for failing to comply with its best execution obligations in connection with its customers’ electronic equity orders between January 2014 and February 2019. 

Digital Assets

SETL helps SWIFT, CSDs and custodians develop common framework for tokenisation systems

London-based enterprise DLT and blockchain company SETL has delivered a pilot project for SWIFT which implemented a common framework linking tokenisation systems between central security depositories (CSDs) and global custodians.

Digital Assets

Crypto volumes hit CHF 87.1 million at Switzerland exchange

Switzerland’s principal exchange has experienced a rebound in trading activities for September 2022, with monthly volumes increasing by more than 20 percent MoM.

Digital Assets

Bitcoin Suisse Vault taps Polkadot governance features

Bitcoin Suisse has added support for Polkadot protocol governance on its proprietary, hyper-secure cold storage solution, the Bitcoin Suisse Vault.

Retail FX

Finalto sweetens offering for African traders with localized FX pairs

Finalto, the financial trading division of Gopher Investments, announced today that it has extended its offering with inclusion of a number of African Pairs to its trading platforms.

<