Court requires extra time to rule in Effex lawsuit against NFA
The lawsuit brought by Effex Capital against the National Futures Association (NFA) seems to be poised for protraction, as indicated by a minute entry by the Illinois Northern District Court.
According to the entry before the Honorable Andrea R. Wood, the Court requires additional time to complete its ruling on the pending motion to vacate dismissal.
The telephonic status hearing set for April 27, 2022 has been stricken and reset for June 8, 2022.
Effex Capital, LLC, the liquidity provider embroiled in FXCM’s exit from the US retail Forex market, is seeking to reopen its defamation lawsuit against NFA. Effex and its principal John Dittami try to revive a lawsuit that was initially opened in June 2017 and has to do with the contents of the materials that NFA published when it settled the matter with FXCM back in 2017.
Let’s recall that Effex filed an action in the Illinois Northern District Court against NFA asserting six counts, including but not limited, to tortious interference and defamation.
Effex contends the NFA Decision contained unopposed unappealable findings against Effex even though:
- NFA had no jurisdiction over Effex;
- Effex was not a party to the NFA Investigation;
- Effex was not allowed to participate in the NFA Investigation;
- Effex was not subpoenaed to testify or produce documents in the NFA Investigation; and
- Effex had no right to appeal or contest the NFA Decision.
Effex further contends that:
- the Release and Narrative contained false and defamatory statements about Effex; and
- NFA’s expressly referencing Effex in the NFA Publications constituted de facto regulation of Effex.
On April 5, 2018, Plaintiffs’ claims against NFA were dismissed by the District Court which found that Plaintiffs failed to exhaust their administrative remedies. Such dismissal was upheld on different grounds by the United States Court of Appeals for the Seventh Circuit, which found that Plaintiffs’ claims were preempted by the Commodities Exchange Act (CEA).
Thereafter, Plaintiffs sought relief before the CFTC which declined jurisdiction stating that Plaintiffs claims were outside NFA’s zone of interest.
Now, as Effex and Dittami seek to reopen the lawsuit, they claim that if their request for relief is denied, they will be precluded from even attempting to obtain relief for the pecuniary and reputational damage they incurred due to the allegedly false and defamatory statements.
The plaintiffs reiterate that they were excluded from the underlying NFA Investigation and have no ability to reopen the NFA Investigation to even clear their names as recently determined by the CFTC Order.
NFA disagrees. The Association notes that the Seventh Circuit’s decision that Effex lacks a cause of action continues to be law of the case and binding precedent. The Seventh Circuit ruled that Effex could not sue NFA directly in federal district court. Instead, the Seventh Circuit held, Effex’s sole avenue to obtain judicial review of NFA’s decision was to seek relief from the CFTC, and then appeal any adverse CFTC ruling to a Court of Appeals.
Here, Effex lost its case before the CFTC and then failed to file a timely appeal to the Court of Appeals.
Effex’s failure to avail itself of that opportunity for judicial review does not open the door to a remedy that the Seventh Circuit held was unavailable, much less warrant reopening this case under Rule 60(b)(6), NFA concludes.