FXCM Inc, now called Global Brokerage Inc, is facing further delay in the lawsuit brought by investors. The plaintiffs have asked for extra preparation time to articulate responses for the summary judgment provided by the defendants.
It all started in February 2017 when FXCM completed settlements with the NFA and CFTC, exiting from the United States retail FX market. Once the regulatory settlements were announced, the value of FXCM’s securities dipped significantly. As a result, the move cost substantial losses for FXCM investors. Click here to know more about FXCM and it is one of the best forex brokers UK.
The SAC (second amended complaint) stated that the defendants were accountable for misleading or false public statements. The complaint indicated FXCM’s order flow relationship and agency trading model with Effex Capital LLC, one of FXCM’s market makers.
The SAC also alleged that FXCM dished out misleading and false financial statements since the organization did not consolidate Effex as a VIE (variable interest entity) or as a related entity. Moreover, the SAC stated that the defendants failed to properly provide investigations by the NFA and CFTC regarding its relationship with Effex Capital.
Forward to March 28, 2019, the court allowed FXCM’s motion to dismiss partly. The call dismissed the plaintiffs’ claims regarding Robert Lande, the former CFO of FXCM. The court also partially denied the defendant’s motion to dismiss by limiting the period for the misstatements imposed by plaintiffs reflecting FXCM’s public termination announcement.
Now, the remaining allegations against FXCM’s misstatements fall into three primary categories:
- Misstatements about its agency model
- Misstatements about the order flow payments by Effex
- Omissions and misstatements regarding the GAAP violations
The defendants talked about the allegations, stating what was initiated as a copy-cat action, repeating the NFA and CFTC’s regulatory violations’ allegations have come to an end. There is no evidence in the discovery record that demonstrates the defendant’s alleged material misstatements. There is no evidence that the defendants did anything with the scienter or the alleged misstatements imposed any harm to the plaintiffs.
Given the complexity of the motion, the plaintiffs’ deadline to submit oppositions has been extended to December 9 from November 11. The defendants can submit further replies from December 13 to January 20.