More than five years after the fact, a number of lawsuits targeting Forex brokers over what happened in the FX markets on January 15, 2015 are finally making their way through the courts.

And, most (if not all) of them are being decided in favor of the brokers.

Nobody foresaw what would happen that day, as the Swiss National Bank (the country’s defacto central banking authority) surprisingly reversed course and announced that they would no longer be holding down the value of the Swiss Franc versus the Euro.

That sent the Franc instantly soaring – by how much exactly remains a mystery, but in the 25-40% range – before settling up about 20% on the day, effectively moving from roughly par with the US Dollar to par with the Euro.

However that one-time step function move up early in the day wiped out many traders who were short the Franc versus the EUR or USD (or anything else), especially traders using leverage as many FX traders do. And, it left a large hole in the pockets of many FX dealers, and not just B-book brokers – they had to pay the big wins of those clients fortunate enough to be long CHF, but could not collect from those clients short the CHF using leverage.

A number of well known retail FX brokers went bust from the effects of that one event, including Alpari UK and LQD Markets, while FXCM narrowly avoided bankruptcy by engineering a life-saving loan from Leucadia (now Jefferies Financial Group), which gave Jefferies effective control of the company.

Well that same FXCM was victorious in a lawsuit brought against the company by one of its former clients, Target Rich International Ltd. Yesterday, a UK judge dismissed Target Rich’s lawsuit against FXCM. Target Rich was seeking to recoup more than $591,000 in losses from FXCM stemming from the Swiss Franc flash crash. Target Rich had a stop loss order in place which was not executed as planned – but again, stop loss orders are only really useful if the market moves in a straight line, not in a step-function “jump”.

As reported by legal news site Law360, UK High Court Judge Adrian Beltrami QC ruled that FXCM had not acted negligently nor breached its contract with Target Rich by not executing the client’s stop loss order, which again would have exited the position at a better price.

Law360 reported that Judge Beltrami wrote The “scope of the claim is limited to the case that FXCM was obliged to secure, yet failed to secure, the stop loss price…. I have rejected the existence of any such duty.”

Judge Beltrami called the Swiss Franc surprise move a “force majeure,” which suspends certain obligations that FXCM had to its client under normal conditions.

Target Rich’s suit against FXCM was brought in December 2018. The company said it believed that the trial held in the case earlier this month was actually the first to be completed on the legal consequences of the Swiss Franc flash event.

However that might have been just the UK. Other such lawsuits stemming from the events of January 15, 2015 have already been brought against FX dealers (which as we noted above were also surprised by the SNB decision, and took heavy losses because of it), several of which were decided like this one in favor of the dealer although some (like one in Hungary brought against Danish broker Saxo Bank) were resolved in favor of the client.