Legal representatives for Global Brokerage, Inc., formerly known as FXCM Inc. (FXCM), Drew Niv and William Ahdout, have filed a proposed settlement with class action principal plaintiffs, E-Global Trade and Finance Group , Inc. (E-Global), LP and Shipco Transport Inc. (Shipco).
According to court documents from February 3, 2023 viewed by the finance tycoons, the settlement amount reached $6,500,000. It corresponds to 37% of the potential damage suffered by investors, estimated at $17.5 million in the best case.
FXCM settles with investors after six years
The case against FXCM is coming to an end after more than six years. It started in February 2017 when Tony Khoury filed the first of four related shareholder actions against FCXM, alleging violations of the Securities Exchange Act of 1934.
The most recent court filing states that “all terms of the settlement and resolution of this matter by the parties, and is intended by the parties to fully and finally compromise, settle, release, resolve, postpone, discharge and dismiss with prejudice the Released Claims (as defined herein) against the Released Parties.”
As part of the pending case, the plaintiffs wanted all persons and entities who purchased publicly traded Class A common stock of Global Brokerage, Inc. between March 15, 2012 and February 6, 2017 to be able to seek relief.
In December 2022, a private mediation took place, which resulted in a decision to completely resolve this action. On December 23, 2022, both parties signed a binding term sheet which sets out the material terms and obligations regarding the settlement.
As part of the settlement, the defendants have denied and continue to deny any allegations of wrongdoing, wrongdoing or damages arising from any of the conduct. They denied that either plaintiffs or trial participants suffered harm as a result of any of the behavior alleged in the case.
“The Individual Defendants continue to believe that the claims made against them in the Action are without merit and have agreed to enter into the Settlement set forth in this Stipulation solely to avoid the expense, distraction, time and uncertainty associated with the ‘Action’, the settlement document added.
Watch the recent FMLS22 panel on retail traders and post-covid challenges.
Allegations against FXCM
The plaintiffs alleged that the brokerage firm had committed securities fraud. He allegedly provided incomplete information and omitted important facts about his relationship with Effex Capital.
The global brokerage misrepresented its alleged agency trading model and its relationship with Effex Capital. The company claimed to provide exchanges on a No Dealing Desk (NDD) model where it is not a party to the exchange but only connects the retail trader to the liquidity provider that offers the best price at that time.
FXCM’s profit was supposed to be just a margin over the execution price, but it turned out that the broker received up to 70% back on the revenue generated by Effex, which was the a major liquidity provider to the firm at the time, additionally investing against FXCM clients.
In the company’s financial statements, this illegal procedure was disguised as “payments for order flow”, with the former brokerage firm Global offering unfair competitive advantages to Effex in order to channel as much of its trading volumes as possible. customers to the business.
It should be recalled that FXCM’s activities were previously part of investigations by the US Commodities Futures Trading Commission (CFTC) and the National Futures Association (NFA). In February 2017, the NFA and CFTC announced settlements with the broker, revealing for the first time the relationship FXCM had with Effex. FXCM had to pay $7 million as part of a settlement with the CFTC and waive domestic regulation, leaving the US market.
In a separate settlement, the NFA revealed that between 2010 and 2014, FXCM received $77 million in rebates from Effectext.
From FXCM to global brokerage
Following its regulatory crackdown, FXCM changed its name to Global Brokerage in late February 2017. However, the brokerage services portion of its business remained as FXCM.
The report published by Global Brokerage for the three months ended September 30, 2022 showed total net revenues of $32.3 million, while for the first nine months of 2022 they amounted to $101.2 million. . This is a slightly lower result than the $37.8 million reported in the second quarter of 2022.
Legal representatives for Global Brokerage, Inc., formerly known as FXCM Inc. (FXCM), Drew Niv and William Ahdout, have filed a proposed settlement with class action principal plaintiffs, E-Global Trade and Finance Group , Inc. (E-Global), LP and Shipco Transport Inc. (Shipco).
According to court documents from February 3, 2023 viewed by the finance tycoons, the settlement amount reached $6,500,000. It corresponds to 37% of the potential damage suffered by investors, estimated at $17.5 million in the best case.
FXCM settles with investors after six years
The case against FXCM is coming to an end after more than six years. It started in February 2017 when Tony Khoury filed the first of four related shareholder actions against FCXM, alleging violations of the Securities Exchange Act of 1934.
The most recent court filing states that “all terms of the settlement and resolution of this matter by the parties, and is intended by the parties to fully and finally compromise, settle, release, resolve, postpone, discharge and dismiss with prejudice the Released Claims (as defined herein) against the Released Parties.”
As part of the pending case, the plaintiffs wanted all persons and entities who purchased publicly traded Class A common stock of Global Brokerage, Inc. between March 15, 2012 and February 6, 2017 to be able to seek relief.
In December 2022, a private mediation took place, which resulted in a decision to completely resolve this action. On December 23, 2022, both parties signed a binding term sheet which sets out the material terms and obligations regarding the settlement.
As part of the settlement, the defendants have denied and continue to deny any allegations of wrongdoing, wrongdoing or damages arising from any of the conduct. They denied that either plaintiffs or trial participants suffered harm as a result of any of the behavior alleged in the case.
“The Individual Defendants continue to believe that the claims made against them in the Action are without merit and have agreed to enter into the Settlement set forth in this Stipulation solely to avoid the expense, distraction, time and uncertainty associated with the ‘Action’, the settlement document added.
Watch the recent FMLS22 panel on retail traders and post-covid challenges.
Allegations against FXCM
The plaintiffs alleged that the brokerage firm had committed securities fraud. He allegedly provided incomplete information and omitted important facts about his relationship with Effex Capital.
The global brokerage misrepresented its alleged agency trading model and its relationship with Effex Capital. The company claimed to provide exchanges on a No Dealing Desk (NDD) model where it is not a party to the exchange but only connects the retail trader to the liquidity provider that offers the best price at that time.
FXCM’s profit was supposed to be just a margin over the execution price, but it turned out that the broker received up to 70% back on the revenue generated by Effex, which was the a major liquidity provider to the firm at the time, additionally investing against FXCM clients.
In the company’s financial statements, this illegal procedure was disguised as “payments for order flow”, with the former brokerage firm Global offering unfair competitive advantages to Effex in order to channel as much of its trading volumes as possible. customers to the business.
It should be recalled that FXCM’s activities were previously part of investigations by the US Commodities Futures Trading Commission (CFTC) and the National Futures Association (NFA). In February 2017, the NFA and CFTC announced settlements with the broker, revealing for the first time the relationship FXCM had with Effex. FXCM had to pay $7 million as part of a settlement with the CFTC and waive domestic regulation, leaving the US market.
In a separate settlement, the NFA revealed that between 2010 and 2014, FXCM received $77 million in rebates from Effectext.
From FXCM to global brokerage
Following its regulatory crackdown, FXCM changed its name to Global Brokerage in late February 2017. However, the brokerage services portion of its business remained as FXCM.
The report published by Global Brokerage for the three months ended September 30, 2022 showed total net revenues of $32.3 million, while for the first nine months of 2022 they amounted to $101.2 million. . This is a slightly lower result than the $37.8 million reported in the second quarter of 2022.