No company, no problem. Drew Niv may have “mega lawsuit” against him stayed
Global Brokerage’s filing for Chapter 11 may result in a stay of the case against individual defendants, including Drew Niv, in a “mega lawsuit” brought by investors.
The former and current executives of Global Brokerage Inc (NASDAQ:GLBR), known in the past as FXCM Inc, may see one of the big lawsuits against them stayed as a result of the company’s filing for Chapter 11.
The case in question is the so-called “mega lawsuit” brought by investors, such as 683 Capital Partners, LP and Shipco Transport Inc. The case, captioned “In re Global Brokerage, Inc. f/k/a FXCM Inc. Securities Litigation” (1:17-cv-00916), is a class action on behalf of investors in the public securities of FXCM Inc. The action is brought on behalf of a putative class consisting of all persons and entities who purchased or otherwise acquired publicly traded FXCM securities from March 15, 2012 to February 6, 2017.
The plaintiffs accuse the broker and a number of its senior executives and employees of violations under the Securities Exchange Act of 1934.
The Complaint alleges that FXCM misled its clients, investors and the regulators by claiming that the company’s “No Dealing Desk” (“NDD”) platform would provide its customers with a Forex trading platform that was free of conflicts of interest. As a result of the investigations by the CFTC and NFA, the allegations and penalties, the price of FXCM’s stock dropped sharply, losing more than half of its value and damaging investors.
Whereas the case had been gradually progressing at the New York Southern District Court, the Chapter 11 move by Global Brokerage changed the development. The bankruptcy filing has already triggered an automatic stay, at least insofar as this lawsuit was brought against Defendant Global Brokerage.
But the stay may also apply to individual defendants, as the latest court filings show. On Friday, December 15, 2017, Judge Ronnie Abrams signed an order concerning the individual defendants in this case: Dror Niv, William Ahdout, David Sakhai, Eduard Yusupov, Janelle G. Lester, Robert Lande, Omit Niv, Nicola Santoro, Jr., Margaret Deverell, David S. Sassoon, Kenneth Grossman, James Brown, Ryan Silverman, Arthur Gruen, Robin E. Davis, Eric LeGoff, and Bryan Reyhani.
The plaintiffs and individual defendants in this case are directed to submit a joint letter, no later than December 29, 2017, indicating whether this case should proceed against the individual defendants, or whether the entire case should be stayed.
Putting it bluntly, less than a year after the findings made by US authorities concerning FXCM and its NDD model became public, triggering the bans on the company and Mr Niv from the US market, Global Brokerage files for bankruptcy and this actually helps the company and its top executives alleviate the litigation burden on them.
There are a number of other cases against Global Brokerage in the United States – the proceedings against the broker have been stayed and we are curious to see whether the individual defendants there will also be given a chance to make use of a stay.