NY Judge asks whether “Black Swan” lawsuit against Drew Niv should be stayed
After the “Black Swan” case against Global Brokerage had been stayed, Judge Kimba Wood asks whether the action should be stayed against Drew Niv too.
Less than a fortnight after Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc, filed for Chapter 11 bankruptcy, questions about the effects of this procedure on the lawsuits brought against the company and its senior executives are piling up.
The filing for Chapter 11 has led to the automatic stay of a number of actions against Global Brokerage, including the so-called “mega lawsuit” and the “Black Swan” case at hand.
But whereas the procedure of staying a case against a company that has filed for bankruptcy is pretty straightforward, the future of proceedings against individual defendants in these cases has yet to be made clear.
On Friday, December 15, 2017, Judge Ronnie Abrams signed an order concerning the individual defendants in the “mega lawsuit”: 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 were 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.
Now, another judge of the New York Southern District Court – Kimba M Wood, who is assigned to the case captioned International Union of Operating Engineers Local No. 478 Pension Fund v. FXCM Inc. et al (1:15-cv-03599), is asking whether the lawsuit should proceed against the individual defendants in the case – Drew Niv and Robert Lande.
On Thursday, December 21, 2017, Judge Kimba M Wood issued an Order informing the parties in the case that on or before January 12, 2018, they shall advise the Court whether this action should be stayed as to Niv or Lande, pending the resolution of FXCM, Inc.’s bankruptcy.
The case is a securities fraud class action brought on behalf of all purchasers of FXCM common stock between March 17, 2014 and January 20, 2015. During the Class Period, Plaintiff and the Class purchased FXCM securities at allegedly artificially inflated prices. When FXCM’s and Niv’s alleged misrepresentations were revealed and the information once concealed from the market was unravelled, the price of FXCM’s securities significantly declined, causing investors’ losses. The defendants’ conduct is said to have caused an economic loss to the Plaintiff and the Class.
Specifically, the defendants are alleged to have wrongly attributed FXCM’s losses to a once-in-a-lifetime “Black Swan event,” falsely stating that the failure of its banks to provide pricing and a lack of liquidity had caused its customers’ positions to be liquidated at dislocated prices. According to the plaintiffs, the FXCM “flash crash” narrative was a smokescreen.
