NY Court nixes TFS-ICAP’s attempt to dismiss CFTC action

Maria Nikolova

Judge Victor Marrero of the New York Southern District Court has found that the issues raised by TFS-ICAP do not warrant a dismissal.

TFS-ICAP LLC and TFS-ICAP Ltd have failed to dismiss the CFTC complaint against them. Judge Victor Marrero of the New York Southern District Court has signed an order nixing the attempt by the companies to escape the CFTC’s action.

The CFTC Complaint alleges that from approximately 2008 through 2015, brokers at TFS-ICAP offices in the United States and the United Kingdom attempted to deceive and deceived their clients by engaging in the practices of communicating to them fake bids and offers and fake trades in the foreign exchange options market. The CFTC Complaint alleges that the practices, known as “flying prices” and “printing trades”, were a core part of TFS-ICAP’s broking business.

Let’s recall that TFS-ICAP LLC and TFS-ICAP Ltd have opposed the CFTC complaint arguing that it contains a set of deficiencies. As per the Court’s order signed by Judge Marrero on January 21, 2020, the arguments of the corporate defendants were not sufficient to dismiss the CFTC complaint.

Regarding TFS-ICAP’s argument that the complaint fails to allege facts showing that TFS-ICAP’s with non-US market participants had a direct and significant connection with activities in, or effect on, US commerce, the Court said it was satisfied with the CFTC’s explanation of the limit of the relief it seeks from TFS-ICAP. In particular, the requested relief addresses actions during the period when TFS-ICAP brokered FX options for US clients.

Further, the Judge ruled that the CFTC’s complaint complies with Rule 9(b) because it alleges specific occurrences of flying prices and printing trades. For example, the complaint includes details regarding printed trades on April 15, 2015, May 12, 2015, and July 20, 2015. The complaint also includes details about a flown price on April 4, 2014.

The purpose of Rule 9(b) is to provide the defendant with fair notice of the plaintiff’s claim. According to the Judge, the CFTC’s complaint provided enough information so that the defendants may respond.

That is why, the Judge denied the motion by TFS-ICAP LLC and TFS-ICAP Ltd to dismiss.

Earlier in January, the Court nixed the motion to dismiss by TFS-ICAP’s CEO Ian Dibb. In November 2019, the Court denied Jeremy Woolfenden‘s motion to dismiss.

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