Investors in FXCM Inc name dozens of potential class members in securities fraud lawsuit
The lawsuit brought by investors in retail Forex broker FXCM Inc, now known as Global Brokerage Inc (OTCMKTS:GLBR), accusing the company and a number of its executives of securities fraud, continues at the New York Southern District Court.
On October 21, 2020, the plaintiffs (lets’ note that the lead plaintiffs are 683 Capital Partners, LP and Shipco Transport Inc.) submitted a set of documents at the Court enlisting the potential class members (See full list at the end of this article).
Let’s recall that this action has to do with 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.
Now, the plaintiffs are naming the potential members of the class. The class is defined as:
“All persons and/or entities that purchased or otherwise acquired publicly traded Global Brokerage, Inc., f/k/a FXCM Inc. (“FXCM”) securities, including FXCM 2.25% Convertible Senior Notes due 2018 and Class A common stock, during the period March 15, 2012 through February 6, 2017, both dates inclusive”.
On October 21, 2020, the plaintiffs presented screenshots taken from Bloomberg Terminal, showing the identities and holdings of FXCM Notes holders at the end of each quarter through the Notes Period: Q2 2014 through Q1 2017. The Bloomberg data show there were 83 unique entities that held FXCM Notes at the ends of the quarters overlapping the Notes Period.
A total of 43 of these holders appear to have sold their FXCM Notes holdings by the end of Q4 2016. These 43 would likely not be class members because they were “in and out” purchasers who were not damaged upon the revelation of defendants’ alleged fraud in Q1 2017. Of the remaining 40 potential class members, Plaintiffs have identified five who signed the forbearance agreement referenced by the defendants: Credit Suisse, Jefferies Group LLC, Penderfund Capital Management Ltd., Zazove Associates LLC, and Phoenix Investment Adviser LLC.
In a separate exhibit, the plaintiffs enlist the 35 potential class members identified through these steps.
There is reason to believe the true number of class members may be greater because the Bloomberg data are not comprehensive.