Settlement talks in FXCM Inc investor lawsuit stall
The lawsuit brought by investors in FXCM Inc, now known as Global Brokerage Inc (OTCMKTS:GLBR), continues at the New York Southern District Court. Prospects of a settlement are distant, as indicated by a letter submitted at the Court today.
Let’s recall that the lead plaintiffs in this action are 683 Capital Partners, LP and Shipco Transport Inc. The case stems from the events from February 2017, when FXCM reached settlements with the CFTC and NFA, in a move that led to its exit from the US retail FX market. The price of FXCM’s securities plummeted after the regulatory settlements were announced, thereby damaging investors in FXCM Inc.
The plaintiffs brought this class action suit against FXCM, Dror Niv and William Ahdout, alleging that, from March 15, 2012 until February 6,2017, Defendants committed securities fraud in violation of Sections IO(b) and 20(a) of the Securities Exchange Act of 1934 and Rule l0(b)-5. Specifically, the plaintiffs allege that the defendants were responsible for false or misleading statements with respect to FXCM’s purported agency-trading model and FXCM’s relationship with another company, Effex Capital.
The letter filed with the Court today shows that a settlement will not be easy to achieve. The parties participated in a private mediation session with Jed Melnick, Esq. of JAMS on September 30, 2020, but were unable to reach a settlement.
Further, the letter states that the plaintiffs had further settlement discussions through the mediator following the mediation. The further discussions stalled given the outstanding motion on class certification – the result of which could materially impact damages.
As FX News Group reported, in October 2020, the plaintiffs submitted a set of documents at the Court enlisting 35 potential class members.
About a week after that the defendants – FXCM Inc., Dror Niv, and William Ahdout, responded to the plaintiffs’ motion. According to the defendants, the Court can and should deny Plaintiffs’ Motion and request to certify a class of purchasers of FXCM’s 2.25% Convertible Senior Notes due 2018 from March 15, 2012 through February 6, 2017 (“Notes Class”).
FXCM’s key argument is that the proposed class lacks numerosity. Put otherwise, the defendants say that the number of potential class members is insufficient for the class certification. If that is so, there will be no class of FXCM Inc noteholders to sue the company and its former management.
The Court has scheduled a conference in this case for Friday, February 19, 2021 at 11:30 a.m.