Investors suing FXCM Inc say they are not interested in settlement at this time

Maria Nikolova

The plaintiffs in the “mega lawsuit” targeting FXCM Inc believe settlement discussions will be more effective once the defendants have produced more documents.


The parties in the so-called “mega lawsuit” targeting Global Brokerage, Inc. formerly known as FXCM Inc., Dror Niv, and William Ahdout, have filed a status letter informing the New York Southern District Court of the progress of discovery to date and the settlement efforts.

Let’s recall that the lead plaintiffs in this case – 683 Capital Partners, LP and Shipco Transport Inc., and additional named plaintiff Sergey Regukh, are pursuing the action on behalf of a class. The class includes “all persons and/or entities that purchased or otherwise acquired publicly traded Global Brokerage, Inc., f/k/a FXCM Inc. (“FXCM”) securities, including FXCM 2.25% Convertible Senior Notes due 2018 and Class A common stock, during the period March 15, 2012 through February 6, 2017, both dates inclusive”.

Put simply, the case is connected to the events from February 2017 when the United States Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) brought regulatory actions against FXCM based on the brokerage’s undisclosed relationship with Effex Capital. On February 6, 2017, the CFTC announced that it had banned the company from operating in the US after finding that FXCM was taking undisclosed positions opposite its retail customers. The CFTC issued an Order which required FXCM, Niv and Ahdout to pay a $7 million civil penalty, cease and desist from further violations of the Commodity Exchange Act and CFTC Regulations, and permanently withdraw from CFTC registration. The same day, NFA also issued an order against FXCM, Niv, Ahdout, and Niv’s sister, Ornit Niv.

In response to the CFTC and NFA orders, the price of FXCM’s stock and the FXCM Notes dropped sharply, damaging investors.

As per the update to the Court provided on January 28, 2020, the plaintiffs have informed the defendants that they are not interested in pursuing settlement negotiations at this time, as the plaintiffs believe settlement discussions will be more effective once th defendants have produced a more substantial set of the documents they have agreed to review.

On June 11, 2019, the plaintiffs served their First Set of Requests for Production of Documents on the defendants, and the defendants served their responses and objections on July 11, 2019. The defendants made their first production of documents to the plaintiffs on August 27, 2019, and made additional document productions on September 20, 2019 and January 2, 2020. After multiple conferences between counsel, the parties agreed in November 2019 that the defendants would review an initial set of over 200,000 documents identified by search terms and custodians. To date, the defendants have produced approximately 2,600 documents. The defendants will continue to produce documents to the plaintiffs on a rolling basis.

The plaintiffs have issued subpoenas for documents to the CFTC, NFA, Goldman Sachs, BNP Paribas, John Dittami, Effex, First Derivatives, and Ernst & Young. Plaintiffs have met and conferred with counsel for each of the subpoena recipients, who have either produced documents or reached an agreement with the plaintiffs to revisit the plaintiffs’ requests for documents once the plaintiffs have had the opportunity to review the bulk of th defendants’ forthcoming document production.

Early in January 2020, as FinanceFeeds reported, the plaintiffs filed their Motion for Class Certification and Appointment of Class Representatives and Class Counsel. The defendants’ opposition to class certification is due on March 6, 2020, and the plaintiffs’ reply is due on April 20, 2020.

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