NFA admits complexity of issues raised by Effex Capital’s complaint

Maria Nikolova

The legal battle over the claims made by the National Futures Association in its news release with regard to FXCM and the broker’s relations with Effex Capital continues.

FinanceFeeds has been keeping its readers up to date with the litigation involving FXCM after the broker had to leave the US retail Forex market following settlements with the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA).

The relevant documents, including a press release and a complaint by NFA, were published on the website of the Association on February 6, 2017. These publications have led to the launch of a lawsuit by Effex Capital and its CEO John Dittami who claim that the allegations made by NFA with regard to FXCM’s relations with Effex Capital are misleading and have caused heavy harm to Effex’s business and reputation.

On June 6, 2017, the plaintiffs filed a Complaint and a Motion for Preliminary Injunction, backed by a 25-page memorandum, 25 pages of affidavits, and 43 pages of exhibits. The Preliminary Injunction Motion seeks that the court directs NFA to:

  • remove the NFA Complaint, Decision, Narrative and Press Release from NFA’s website or, in the alternative, provide Plaintiffs with a name clearing hearing;
  • issue a release stating that no adjudicatory findings were made concerning Effex or Dittami;
  • and for such other further and different relief as the Court deems just and proper.

The NFA was given time until July 7, 2017  to respond to this motion.

The NFA attorneys have apparently mobilized and are starting to build up the defence, as court filings, seen by FinanceFeeds, show that the NFA is pushing for more time to respond to the preliminary injunction motion. This is somewhat of a trivial request, as attorneys for defendants often need time to get acquainted with all the documents relevant to a case.

The interesting part about NFA’s request is that the Association attributes it to “the number and complexity of issues raised by Plaintiffs’ Complaint and PI Motion”. Obviously, NFA is taking the claims seriously.

Concerning the time extension, it is for a couple of days only. The NFA attorneys ask that the Association files a motion to dismiss and a memorandum in opposition to the Preliminary Injunction Motion before or on July 10, 2017.

The Plaintiffs’ counsel does not object to the NFA proposals.

Why is this Preliminary Injunction Motion so important? Of course, if the NFA takes down the publications, this will be a win for Effex Capital and its CEO. More importantly, however, the claims made in these publications serve as the basis for a number of legal cases launched against FXCM, Global Brokerage Inc (NASDAQ:GLBR), previously known as FXCM Inc, Drew Niv, William Ahdout and other (former and current) principals of FXCM, as well as Effex Capital.

In explaining the extent of damages suffered as a result of the allegedly false claims made in the NFA publications from February 6, 2017, Effex Capital and Dittami mention the lawsuit brought by Vantalie Nguyen, which names Effex and its CEO among the defendants in the case. That case uses the publications on NFA’s website in its Complaint. Any change to these publications, especially their removal from the Association’s website, may hamper the progress of cases like that brought by Nguyen, as their evidentiary support will be undermined.

So, we are looking at a serious battle over what may seem as a minor and trivial PI request. That is because the consequences may be crucial for FXCM too and, hence, for the regulation of the retail FX industry in the United States.

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