NY Judge orders consolidation of two cases brought by ex-FXCM clients

Maria Nikolova

The two consolidated cases are brought by former FXCM clients who allege they suffered harm as a result of the undisclosed relationship between FXCM and Effex Capital.

Judge Paul A. Crotty, of the New York Southern District Court, on Thursday ordered the consolidation of two legal actions brought by former clients of FXCM, who allege they suffered damages as a result of the undisclosed relationship of the broker and Effex Capital.

The order comes in response to a motion by the plaintiffs to consolidate the two cases – Cardi et al v. FXCM, Inc. et al (1:17-cv-04699) and Nguyen v. FXCM Inc. et al (1:17-cv-02729).

In the order, seen by FinanceFeeds, Judge Paul A. Crotty attributes his decision to the fact that the two actions present similar factual and legal issues, as they both involve the same subject matter, and present, for the most part, the same legal issues. Both actions are securities/commodities/exchange actions with a similar fact pattern and the same defendants, including Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc, Forex Capital Markets LLC, Global Brokerage Holdings, Drew Niv, William Ahdout, Effex Capital and John Dittami.

Also today, the Court named the law firms of Gainey McKenna & Egleston and Levi & Korsinsky, LLP as Interim Co-Lead Counsel for the consolidated actions. The list of responsibilities of the Interim Co-Lead Counsel include, inter alia, coordinating the preparation and filing of a Consolidated Amended Complaint, and any subsequent pleadings, as well as coordinating the briefing and argument of all motions.

Interestingly, Vantalie Nguyen (one of the plaintiffs) and FXCM have agreed to stay the proceedings against the so-called FXCM defendants: Global Brokerage Inc (NASDAQ:GLBR), Forex Capital Markets LLC, Global Brokerage Holdings, Drew Niv, and William Ahdout, pending arbitration. The stay is due to the fact that Nguyen is a former client of FXCM and that the Client Agreement contained an arbitration clause.

FXCM is also defending itself in a “mega” lawsuit brought by a class of plaintiffs who bought securities in the company and allege harm as a result of the drop in the share price of the company following the February 2017 settlements between the broker and US regulators. Earlier this month, the so-called FXCM defendants filed a Motion to dismiss the class action. In the document, the allegations made by the plaintiffs are called “boilerplate mantra” and the broker claims that its agreement with Effex did not harm FXCM retail customers or cause them to lose money on their trades. The company also argues the agreement “provided significant financial benefits to FXCM customers”.

The legal actions continue at the New York Southern District Court.

Read this next

Retail FX

Italian watchdog red flags Olympus Brokers, UnicoFX and Allfina Group

Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB) has shut down new websites in an ongoing clampdown against firms it accuses of illegally promoting investment products in the country.

Retail FX

XTB revenues hits zł1.45 billion in 2022, Q4 earnings disappoint

Poland-based Forex and CFDs broker, XTB has reported its final results for Q4 of 2022 and the full fiscal year ending on December 31, 2022, showing one of its most successful corporate years.

Executive Moves

Lirunex Limited recruits Waleed Salah as head of MENA sales

Maldives-based brokerage firm Lirunex Limited has secured the services of Waleed Salah, who joined the company in the role of its head of sales for the MENA region.

Executive Moves

Trading 212 parts ways with co-founder Borislav Nedialkov

Trading 212 has a void to fill at its FCA-regulated business in London, following the departure of two key players, Raj Somal and Borislav Nedialkov.

Digital Assets

Binance acquires troubled crypto exchange GOPAX

Binance, the world’s largest digital asset trading platform, has reportedly acquired a majority stake in the troubled South Korea-based cryptocurrency exchange GOPAX.

Digital Assets

Kraken exits Middle East, closes UAE office

Digital currency exchange Kraken will close down its operations in Abu Dhabi, UAE and lay off the majority of its team focused on the Middle East and North Africa.

Industry News

CFTC comments on ION Cleared Derivatives issues after Russian-linked hack

“The ongoing issue is impacting some clearing members’ ability to provide the CFTC with timely and accurate data. As this incident unfolded, it became clear that the submission of data that is required by registrants will be delayed until the trading issues are resolved.”

Industry News

FCA took down 14 times more misleading ads in 2022 thanks to technology

The FCA has made significant improvements to the digital tools it uses to find problem firms and misleading adverts. These improvements have enabled it to work through a much larger number of cases compared with 2021.

Executive Moves

HKEX appoints ex-Goldman Sachs Matthew Cheong to lead platform’s focus on derivatives

“He has worked for a number of the world’s leading investment banks and his experience will be invaluable to HKEX as we continue to enhance our derivatives product offerings and build on our innovative and robust platform business, connecting capital with opportunities.”

<