A lawsuit brought by a trader using the FOREX.com platform regarding losses he suffered as a result of WTI futures negative prices continues at the New Jersey District Court. The latest Court filings indicate that the defendant in this case – GAIN Capital Holdings Inc, is not giving up and is challenging the claims made by the plaintiff – Jun Zhang.

As per the most recent Court filings, seen by FX News Group, GAIN Capital argues the plaintiff fails to state a claim and, that is why, the case should be dismissed.

Let’s recall that Zhang opened a trading account with GAIN in 2017, through GainCap’s trading platform, forex.com. One of Zhang’s major trading activities via forex.com concerned “US_OIL,” with a Chinese name literally meaning U.S. Crude Oil, a “derivative product” that closely tracks the prices of the U.S. crude oil futures benchmark WTI traded in commodity future exchanges in the United States.

The instant lawsuit arose from the negative pricing of WTI futures which occurred in April 2020.

On April 20, 2020, when the WTI May 2020 contracts were set to expire, their pricing dropped to the negative territory, reaching -$40.32 per barrel at its lowest point and closing at -$37.63 per barrel. Throughout this turmoil, however, according to the plaintiff, GAIN’s US_OIL contract pricing remained in the positive territory, with the lowest price shown as $0.01 per barrel and the closing price at $0.05 per barrel.

Further, Zhang explains that some 22 minutes before the closing of U.S. crude oil trading on that day, GAIN’s US_OIL halted trading, thus dissociating the derivative from its underlying WTI futures contracts. The next morning, on April 21, 2020, GAIN’s platform showed the settlement pricing of US_OIL for the May contracts as $0.01. The customer service email on that day did not mention negative pricing, either, Zhang notes.

However, on April 23, 2020 which was three days after the expiration of the WTI May 2020 contracts, Zhang received an email from GAIN announcing that Zhang’s US_OIL account has been assessed an “adjustment” of -$143,032 due to the negative pricing of WTI’s May 2020 contract and that GAIN had withdrawn that adjustment amount from Zhang’s Trust Account.

Zhang then had a call made to GAIN’s customer service to inquire the reasons for the sudden “adjustment.” He was told that it was a decision made by GAIN’s trading platform.

Plaintiff complained several times to Defendant, to no avail.

Zhang’s Complaint alleges breaches of duty on the part of GAIN. In particular, the plaintiff’s complaint makes three claims for breach of fiduciary duty, negligence, and violations of New Jersey Consumer Fraud Act (“NJCFA”).

GAIN, however, opposes these claims and this opposition is reiterated in the latest documents submitted at the Court. The broker says Zhang has not alleged a breach of any legally recognized duty. “He simply invents his own duties that he thinks should apply but cites no law that supports his position”, the broker insists.

According to GAIN, Zhang “simply invents a relationship out of thin air and dictates what he says are the terms and duties of that relationship”.

The broker says that the plaintiff declares that Gain “has the duty to fulfill Plaintiff’s buy and sell orders” and “a legal duty” to set the price of US_OIL at the exact price of WTI Crude Oil Futures. However, Zhang cites no law that would support these duties. “His legal argument is apparently that Gain owes these duties because he says so”, GAIN argues.

The broker says that the reason Zhang lost money is “because he got exactly what he claims he wanted. He used the US_OIL contract to speculate on the price of oil and when oil prices went negative, he lost money”.

“He has no basis to try and recover those losses from Gain, even under his own legal theory”, GAIN says.

The broker concludes that, because the Complaint fails to state a claim upon which relief can be granted as a matter of law, the Court should dismiss the entire action.