Stockholders of FXCM Inc, now known as Global Brokerage Inc, have filed a motion for final approval of their settlement with FXCM, Drew Niv and William Ahdout.

The relevant documents were filed with the New York Southern District Court on June 11, 2023.

Let’s recall that, on February 21, 2023, the Court preliminarily approved the Settlement of this Action as fair, reasonable, and adequate.

To date, no Class Members have filed an objection to any aspect of the Settlement, and no Class Members have submitted a valid request for exclusion from the Class.

The Settlement resolves this litigation, between Plaintiffs and Defendants FXCM, Dror Niv, and William Ahdout that has continued for more than six years. The Settlement is the product of arms-length negotiations after mediation with neutral Jed Melnick of JAMS, including the exchange of detailed mediation statements and the parties’ participation in two separate mediation sessions at different stages of the litigation, finally resulting in the parties accepting a mediator’s proposal just weeks before trial was scheduled to commence.

These arms-length negotiations among experienced counsel with a neutral mediator, along with the positive reaction of the Class render the Settlement presumptively fair.

In advance of the settlement, Plaintiffs, through Class Counsel, thoroughly investigated Plaintiffs’ claims and zealously represented the Class, defeating Defendants’ motion to dismiss, obtaining certification of the Class, completing extensive fact and expert discovery, defeating Defendants’ motions for summary judgment and to exclude the testimony of Plaintiffs’ experts, and filing a pretrial memorandum and motions in limine on the doorstep of trial.

While Plaintiffs believe that they would be able to prove their claims at trial, Defendants have denied and continue to deny liability and damages. Even at this late stage of the litigation Plaintiffs faced significant challenges in obtaining a full judgment on their claims, including defeating Defendants’ motions in limine, prevailing at trial on complex securities fraud claims, prevailing on Plaintiffs’ expert’s view of the full measure of damages, and prevailing on the expected post-trial motions and appeal.

Thus, even if Plaintiffs were to prevail at trial, absent the Settlement there is no guarantee the Class would have recovered as much, or anything at all.

That is why, according to the plaintiffs, the Court should approve the Settlement as fair, reasonable, and adequate, and it should likewise approve the Plan of Allocation.

Let’s recall that, the plaintiffs in this lawsuit include (inter alia): Lead Plaintiff 683 Capital Partners, LP and Class Representatives Shipco Transport Inc. and E-Global Trade and Finance Group, Inc.

The plaintiffs brought claims against FXCM, Dror Niv, and William Ahdout under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b- 5 promulgated thereunder. Shipco and E-Global bring claims on behalf of themselves and a certified Class comprising “all persons and/or entities that purchased or otherwise acquired publicly traded Global Brokerage, Inc., f/k/a FXCM Inc. (“FXCM”) Class A common stock, during the period March 15, 2012 through February 6, 2017, both dates inclusive.” 683 Capital brings its claims on an individual basis.

The plaintiffs alleged the defendants committed securities fraud by misrepresenting and omitting material facts about FXCM’s secret relationship with Effex Capital, LLC. FXCM offered foreign exchange trading to retail customers, touting their “No Dealing Desk” or “agency model,” where instead of FXCM trading directly opposite the customer, FXCM connected the customer with a liquidity provider offering the best price, with FXCM merely adding a mark-up to the price as a commission.

However, according to the plaintiffs, unbeknownst to FXCM’s customers and investors, FXCM was secretly receiving kickbacks of roughly 70% of the trading profits from Effex, one of FXCM’s primary liquidity providers who was trading against FXCM’s customers.

According to the plaintiffs’ complaint, Effex was run by John Dittami, whom Defendants Niv and Ahdout hired at FXCM to create an internal trading system, EES, that would compete with external market makers. Dittami’s contract with FXCM provided for a 70-30 split of EES’s trading profits (70% to FXCM). When FXCM’s compliance department decided that FXCM could not truthfully say it was operating an agency model if EES was trading against FXCM’s customers, Defendants decided to spin off EES as Effex. However, FXCM and Effex kept the 70-30 split of trading profits—with Effex swapping in for Dittami and FXCM keeping its 70% share—which they disguised as “payments for order flow.” FXCM provided critical support to Effex for years, and Effex relied on FXCM to stay afloat.

Effex became one of FXCM’s biggest liquidity providers and Defendants provided special trading advantages to direct more of FXCM’s trading volume to Effex.

In 2013 and 2014 the National Futures Association (NFA) and the U.S. Commodities Futures Trading Commission (CFTC) began investigating FXCM’s relationship with Effex. On February 6, 2017, after the close of trading, the NFA and CFTC announced regulatory settlements with the defendants, revealing the undisclosed relationship between FXCM and Effex and imposing severe penalties. The next day, the price of FXCM securities dropped precipitously, harming Plaintiffs and the Class.

The Settlement provides for a Settlement Fund of $6,500,000 in cash. Plaintiffs’ damages expert estimated maximum aggregate damages of $17.5 million in Plaintiffs’ best-case scenario.