FXCM Settlement Approval Update: $6.5M Distribution Motion

FXCM Settlement Update: Plaintiffs File for $6.5M Distribution Approval in Class Action Lawsuit Development. The motion, submitted on December 20, 2023, outlines the details of the claims process, indicating that out of 8,252 claim forms received, 452 valid and properly documented claims have been identified. These claims, totaling Recognized Losses of $3,950,772.91, are now awaiting court approval for distribution.

Plaintiffs are urging the Court to approve all 452 valid claims, including 447 timely submissions and five late but valid claims. They argue that the latter has not caused any delay in the distribution process or prejudiced any authorized claimant.The Claims Administrator, however, recommends the complete rejection of 7,751 claims for various reasons, including lack of Recognized Losses, shares acquired outside the Class Period, and fraudulent claims.

FXCM Settlement Approval Update: Motion Filed for $6.5M Distribution Approval

The underlying lawsuit, filed against FXCM, Dror Niv, and William Ahdout, alleges securities fraud under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Plaintiffs represent a certified Class comprising individuals and entities that purchased or acquired publicly traded Global Brokerage Inc. Class A common stock between March 15, 2012, and February 6, 2017.

The heart of the allegations revolves around FXCM’s purported misrepresentation and omission of material facts concerning its secret relationship with Effex Capital, LLC. Plaintiffs claim that FXCM, while promoting a “No Dealing Desk” model, was clandestinely receiving kickbacks from Effex, one of its primary liquidity providers, amounting to approximately 70% of trading profits.

The lawsuit details how Effex, under the direction of John Dittami, was originally part of FXCM and later spun off to maintain the appearance of an agency model. Despite this separation, the 70-30 profit split between FXCM and Effex persisted, disguised as “payments for order flow.”

Investigations by the National Futures Association (NFA) and the U.S. Commodities Futures Trading Commission (CFTC) in 2013 and 2014 eventually revealed the undisclosed relationship between FXCM and Effex. Regulatory settlements on February 6, 2017, led to severe penalties, causing a substantial drop in the price of FXCM securities and resulting in harm to Plaintiffs and the Class.

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