Legal cases against FXCM continue to pile up in NY court
The latest case against the broker was filed yesterday on behalf of FXCM customers from five US states who claim to have suffered losses due to the broker NDD claims.
The volume of legal actions against Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc, keeps growing, with the New York Southern District Court being the usual institution to receive the complaints against the broker.
On Wednesday, June 21, 2017, another civil case was filed against the company. The case, captioned Cardi et al v. FXCM, Inc. et al (1:17-cv-04699), has seven defendants, including Global Brokerage Inc, Forex Capital Markets LLC, Global Brokerage Holdings, Drew Niv, William Ahdout, Effex Capital and John Dittami.
The class includes all persons who between March 10, 2010 and February 6, 2017 entered into a forex transaction through FXCM’s “No Dealing Desk” platform. There are also subclasses including all plaintiffs in New York, California, Wisconsin, Oregon, and South Carolina.
The class action alleges that the defendants violated the Commodities Exchange Act and the consumer laws of New York, California, Wisconsin, Oregon and South Carolina. According to the complaint, filed with the court, the defendants got enriched on behalf of all customers of FXCM who placed trade orders through FXCM’s “No Dealing Desk” platform while the broker publicly asserted that it had no conflict of interest in the outcome of trades made on the NDD Platform.
The plaintiffs claim that they have been harmed because “revenues flowed improperly to FXCM, Inc., FXCM Holdings, Forex Capital and Effex Capital, LLC” and insist they are entitled to damages as a result of the unjust enrichment of the defendants. The plaintiffs also demand the imposition of a constructive trust on all monies wrongfully obtained by the defendants and that the court directs FXCM to identify victims of its conduct and pay them restitution and disgorgement.
The attorneys for the plaintiffs have filed a related case statement with the court. The statement says that the Cardi et al v. FXCM, Inc. et al (1:17-cv-04699) action is a securities/commodities/exchange action with a similar fact pattern and the same defendants as (1:17-cv-02729), that is, the case filed by Vantalie Nguyen against FXCM and Effex.
The Nguyen case is at an early stage. The Complaint was filed and served, and defendants requested and received an extension to respond until July 14, 2017.
The allegations made in the Cardi case and the Nguyen case are partially based on information in the National Futures Association (NFA) complaint against FXCM and its principals. The document, along with a press release was published on NFA’s website on February 6, 2017.
Effex Capital claims that the NFA complaint, which stated that Effex was controlled by FXCM, has caused a number of Effex’s existing and prospective counterparts, vendors and prospective vendors to stop or to decline to conduct business with Effex and Dittami. In addition, firms have refused to issue positive reviews of Effex or Dittami, whereas commercial banks have terminated their relationships with Effex and Dittami. Effex is now seeking a preliminary injunction against NFA that will force the body to remove the complaint and the press release from its website.
If this happens, the evidentiary support for several legal cases against FXCM, including the Nguyen case, will be undermined.