Class Action Lawsuit Against FXCM

FXCM faces two investigations for alleged securities law violations

 

1. Posted by Michael Greenberg in Brokers
2. 2 Comment

It seems like many parties were waiting on the lines for FXCM to go public as now there’s a plethora of lawsuits against the forex broker. Morgan Business Trial Group launched a class action suit against FXCM couple of weeks ago and now two more investigations of FXCM were announced. This time both investigations focus on FXCM’s IPO itself and investigate claims on behalf of investor allegations that certain statements issued by the Company regarding FXCM’s business, operations and financial performance were materially false and misleading. This is due to the Citi’s earnings downgrade for FXCM’s stock price from $18 to $14 only 3 months after the IPO. On the day of the downgrade the stock fell 13% and many investors may have felt that the IPO price did not reflect the actual status.
Investigation 1:
Kahn Swick & Foti, LLC (“KSF”) and Former Attorney General of Louisiana, Charles C. Foti, Jr. announce the commencement of an investigation into FXCM, Inc. (“FXCM” or the “Company”) (NYSE:FXCM – News) to determine whether it has violated federal securities laws by issuing false and misleading statements to its shareholders.
Only 3 months removed from the Company’s IPO, shares of FXCM closed down 13% today – to a low of $12.05 on heavy volume – following the release of results from last month that were “substantially” below expectations according to one analyst. William Katz at Citi wrote in a note that “the data calls into question our 2011-12 … growth assumptions and begin to suggest greater maturity in the business than previously contemplated.” Moreover, today’s decline comes on the heels of a lawsuit filed by an FXCM customer last week alleging fraud and racketeering, claiming that the Company has bilked thousands of customers out of hundreds of millions of dollars using deceptive and unfair trade practices.
Investigation 2:
Law Offices of Howard G. Smith announces that it is investigating potential claims on behalf of purchasers of the securities of FXCM Inc. (“FXCM” or the “Company”) (NYSE:FXCM – News) concerning possible violations of federal securities laws. FXCM is an online provider of foreign exchange – or FX – trading and related services to retail and institutional customers globally.
The investigation focuses on allegations that certain statements issued by the Company regarding FXCM’s business, operations and financial performance were materially false and misleading. On February 16, 2011, FXCM shares fell to their lowest level since the Company’s initial public offering in December 2010. Citi Investment Research analyst William Katz cut his earnings estimates for the Company for 2011 and 2012, and lowered his price target for the stock from $18 to $14. Katz wrote in a research note that the year-to-date data have raised questions about growth assumptions for the Company, and “begin to suggest potentially greater maturity in the business than previously contemplated.”

I am a reporter with the Los Angeles Times reporting on this class action lawsuit. I am hoping to speak with some traders who have experience with these issues.

If you are willing to talk please send me an email at
nathaniel.popper@ latimes.com.

Just read through the FXCM thread and you should have enough to write a book. This "composite" entity by the name of Jason Rogers left so may lies over there, that if you know what you are looking for you not gonna need to talk to anybody else.

Nice to see shareholders voting with their feet. Shares now down to 11.92. Keep going guys. Knock these scammers down to zero.

Yeah whatever. Everybody steps on a guy who's appearing to go down. That's our beautiful human nature at work.

mabe because they strew over so many people

Indeed. Time for FXCM to be screwed over for once.

Burn baby burn!

Like I said, whatever.

One may want to check out the class action law suit filed against Vonage right after they went public, It accused them of false advertising, knowingly providing bad service lying about their connections and false advertising amog other things, and also using someone elses patent, their CEO was forced to step down BEFORE the IPO because he had been convicted for fraud in a prior business dealing.

Does this mean they are an evil company preying on unsuspecting people to buy there voice product?
or does it mean that lawyers wanted to cash in

BTW, the customers who became part of the suit settled for approx $8 dollars apiece the lawyers were of course paid their fees.

So just because an evil company is accused, it doesnt mean they are guilty

I am a customer of FXCM and if you trade large lots with any broker you have slippage, this is not an exact science even though we have 5 digits it does not and cannot guarantee that exact price, this is a VERY large flaw with ANY metatrader platform, thus active traders use it only for charting purposes

But, just my two cents.

FXWest

I don't think this case is about slippage. LOL. slippage to the tune of $150k? seriously did you even read the thread?

sure I did,
the example of the vonage lawsuit was for some very serious accusations at the time, which were discussed in their IPO as a possible future lawsuit that could and eventually happened. Look what happened in the end, without acknowledging and wrongdoing it was settled and the class action participants received virtually nothing. but, the super nice guy, lawyers certainly received their share.

This example of slippage goes to show that all these brokers have put together a very complex system and the possibility of a client being a bad trader and losing $150K or any amount can easily be blamed on the broker ESPECIALLY after the just went public!

The probability of the exact same thing happening here as it did with vonage is very high, and the last time we all looked on TV, vonage has an even larger market share.

I imagine that if we were able to look at this clients actual trades he wouldn't be able to hold a candle to your trades, as you seem knowledgeable to me, but time will tell,
my point is the evil company is not always to blame, many times the customers are simply bad customers and would lose in any system

well slippage is a totally different issue and I'm not sure why you keep mentioning that when I haven't seen anything in this case to signify slippage is part of the lawsuit.

I traded with FXCM back when they were a dealing desk broker. Times change and the game changes with it. That has been a long time ago.

But I have a friend that traded with them maybe a year ago thru a MT4 bridge they set up to allow trading with MT4. He discovered that this bridge software they were using was more or less giving them a license to steal, because the tactics it used was hidden and you had to dig for it.

Anyway to make a long story short, he didn't even think about suing them. He just closed his account and walked away from them.

The biggest problem for the plaintiff is being a dumbass and taking loss after loss. But when you trade this market and the brokers are all saying transparency, honesty, we are regulated blah, blah, blah. It is very easy to be naive about how some of these brokers operate. You take things for granted and shrug it off as your error etc. We FX traders all have had losses at various times and know how debilitating they can be.

IMHO, FXCM didn't get such a thick bank account by not taking a few choice clients of theirs to the cleaners. But that's just my opinion.

They dont need to specifically mention the word "slippage" for it to be part of the lawsuit. I quote from the lawsuit " Instead, Sanders alleges, FXCM uses a number of devices and tricks, including software applications, designed specifically to interfere with customers’ trades"
Part of interfering with customer's trades is among other things, slippage which could be on entry or exit or both. That slippage could be due to a liquidity problem or the dealing desk setting up the slippage in their favour by using a software application as was the case when Gain and Ikon were recently fined by the NFA.

And, just like FXCM, only worth one cent

Error? An error of $150,000 loss???! Wonder what made him stop at $150,000?? He could've still went on and "shrug off" as his own error at like $1,500,000 lossess.

Not to be sarcastic at you but his action really made me doubt if he had other motives or he was really just a naive and incompetent trader especially with the ABUNDANCE of information available on the Internet about everything from broker ratings and reviews and trading strategies. It's not like what it was ten years ago when there were just few bucket shops around for retail Forex and you were really at the mercy of whatever they give you. No regulations, no rules, no guarantees and anything goes. It's either them or nothing. You are lucky just to be able to get your money back when you want to close your accounts.

Without action more and more traders would be screwed up.
Brokers are infected with desease of greed and making easy non-risk profits.
FX industry needs more scandals to reveal the reality as much as possible.
I did my trades on FXCM and didn't lose any money (like in most of platforms), but platform was tweaked and manipulated.
When anyone loses money on FX and try to sue broker it looks bit suspicious for evident reason.
My point is not to fight with brokers because anyone lost their money, but because of their practices that violate initial idea of 'fair trading rules'.
I didn't sue FXCM for simple reason that technically I couldn't put any firm proof that they took 5,7 or 15 PIPS from any particular trade.
But they did it (AGAIN, ALL BROKERS DO THAT) and I closed my account.
Now question is - should we discuss such situations and wish particular broker to be accussed for doing wrong.
IMO yes and as much as possible, so traders will become more and more informed and enlightened. Some of them will join forces to get some proofs and hopefuly go to court.
In ideal world, small traders who intend to earn on Forex market should be somehow united and profesionally represented via some organization that will monitor what is going on with particular brokers. If financial and expert power is involved (compared to weak, non-protected individual trader's capabilities) both regulators and brokers would put efforts to improve FX trading environment.

yeah I know it sounds blatantly stupid on the part of this guy, but ya know there were people worth millions of dollars that gave money to the "Madoff foundation" that was supposedly intended to make these individuals more money.

Hard to say why he stopped at $150k. I guess everyone has their own number. Even still as stupid as this guy was, if FXCM / FXDD is found guilty they should pay for it.

In all reality though nothing much will likely change.

Madoff's victims thought they were making money--that's why they continued with him. If their statements had shown their accounts dwindling and they suspected fraud, they probably would have tried pulling their money out.

So true. You can always manage to make a strong point with so little words

There is a fine little line from "thinking you are making money" to "thinking you will make money." LOL.

who has seen the fxcm ads that says: "It's so easy to trade the Euro." ?

While the people depositing with Madoff are more hands off approach to make money in the end neither did their due diligence. In my dictionary there is only one definition for being stupid.