NFA refers to FinanceFeeds in building defense against Effex Capital, involved in FXCM US exit

Maria Nikolova

NFA refers to FinanceFeeds’ remark about the lack of public availability of a big part of the information in the case brought by Effex Capital, implicated in FXCM’s exit from the US retail Forex market.

The case brought by Effex Capital, the company whose business relations with FXCM were one of the key reasons for the regulatory settlements with the broker and its exit from the US market, against the United States National Futures Association (NFA) is interesting for at least a number of reasons:

  • It challenges the immunity of NFA with regard to such legal actions.
  • It sheds some light on what led to the events from February 6, 2017.
  • It seeks taking down NFA’s complaint and press release about the settlement with FXCM, which may influence the outcomes of several legal actions against the broker.
  • It has thus far hidden from public view a number of documents filed in this case.

In an article dated August 16, 2017, FinanceFeeds stresses that “FinanceFeeds is closely examining all filings in the case, however many of the documents are sealed”.

In its latest filing in the case, the National Futures Association (NFA) refers to this particular remark by FinanceFeeds, as the Association seeks to keep more of the information on the case public.

“This lawsuit has gotten public attention, and Effex’s efforts to seal publicly-available information has impeded the public from learning basic facts about the case”, the NFA notes before referring to FinanceFeeds’ article.

“Effex has therefore filed an overbroad sealing request which would require NFA to seal almost everything it files”, NFA concludes.

NFA notes that some of the exhibits that Effex is trying to seal have been publicly available for months and will stay there. Second, the couple of paragraphs in the NFA Complaint against FXCM from February 6, 2017, which allegedly reveal Effex’s trade secrets, are dubbed insufficient to justify a blanket sealing order on everything NFA will file in the case. Then, there is the administrative burden on the court and NFA as a result of reviewing each document with regard to its possible sealing/unsealing.

NFA refers to Hicklin Eng’g, L.C. v. Bartell, 439 F.3d 346, 348–49 (7th Cir. 2006):

“What happens in the federal courts is presumptively open to public scrutiny. . . Any step that withdraws an element of the judicial process from public view makes the ensuing decision look more like fiat and requires rigorous justification.”

Of course, it is not a part of professional journalism to take sides when covering a legal action. However, providing a comprehensive picture of a legal action is an essential part of professional journalism. The fact that a substantial portion of the documents in this case are sealed prevents a journalist to provide the public with impartial and detailed coverage of the legal matters at hand.

Even more stunningly, the large majority of documents filed in this case are all related to requests/motions for sealing (and leave to file sealed) exhibits. As NFA puts it:

“This case is about the exhibits that Effex seeks to seal—specifically, whether NFA’s publication of those exhibits is defamatory, tortious, or a due process violation.”

One question to consider is whether this sealing drive does not deflect the court and the public attention away from the real problem at hand – the nature of the business relationship between Effex Capital and FXCM and whether this relationship justified the mentioning of Effex’s name in the NFA public releases dated February 6, 2017. This matter is now drowning in motions to seal/unseal exhibits.

The legal action, captioned Effex Capital, LLC et al v. National Futures Association et al (1:17-cv-04245), continues at the Illinois Northern District Court.

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