NFA seeks to keep FXCM complaint and news release public

Maria Nikolova

NFA argues against the sealing of many of the materials in the lawsuit brought by Effex Capital, the company involved in FXCM’s exit from the US retail FX market.

The results of FXCM leaving the US retail Forex market have been various, ranging from the change of FXCM Inc’s name to Global Brokerage Inc (NASDAQ:GLBR) to a raft of legal actions taken against the broker in US courts. It was the business relationship between FXCM and Effex Capital that served as a basis for the regulatory action and a number of the cases launched against FXCM and Effex. One of these cases, however, has Effex Capital among its plaintiffs and targets the United States National Futures Association (NFA).

As FinanceFeeds has previously reported, Effex Capital has filed a motion for preliminary injunction seeking NFA to remove a number of texts from its website – practically all materials dated February 6, 2017, related to FXCM’s alleged violations of US laws.

On Monday, NFA’s lawyers sought to put an end to the lawsuit. Those who expect that the arguments will be centered around liquidity provision, business relationships, undisclosed interest, risk management and/or NDD will be disappointed. The heart of the case is about making information public.

What NFA is trying to prove is that many of the materials in the case should be unsealed and that those that are already public should not be sealed. Currently, at least 7 of the exhibits accompanying various motions in the case have restricted access to them in the court filing system. This is in a way absurd, as many of these (such as documents made public in other court cases, and news releases made by the CFTC and NFA) are already public. Other documents that are sealed serve as the basis for NFA’s arguments and it will be difficult for NFA to prove its case against Effex’s claims if these are sealed.

What NFA says is “NFA’s response necessarily addresses the content of those documents at length and they are inescapably at the heart of all the legal issues the Court must address in this case.” The case is about  NFA Complaint, NFA Decision, NFA Narrative, and NFA Press Release – all published on February 6, 2017, and all concerning FXCM’s violations of US laws.

“Sealing those documents, and all other documents referring to them, will wall off this entire lawsuit from the public, in contravention of the public’s right of access to the courts”, NFA states.

On Monday, NFA filed a Motion to Dismiss the complaint by Effex Capital and John Dittami. According to the document, seen by FinanceFeeds, NFA claims that Effex Capital’s complaint has a number of defects, including:

  • “as a self-regulatory organization, NFA has absolute immunity because all Effex’s claims arise out of NFA’s execution of its regulatory responsibilities;
  • Effex improperly and prematurely brought suit without first exhausting its administrative remedies;
  • Effex’s state-law claims are preempted by the complex regulatory framework Congress established in the Commodity Exchange Act for the national futures markets and Effex lacks a private cause of action for its federal due process claims.”

The legal battle continues in the United States District Court for the Northern District of Illinois Eastern Division.

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