FXCM Accused of Fraud in Class Action Lawsuit
In a press release issued earlier today The Business Trial Group of Morgan & Morgan, P.A. announced that it had filed a class action lawsuit today against Forex Capital Markets, LLC (FXCM) alleging fraud and racketeering. My thanks to Michael Greenberg over at ForexMagnates for bringing this interesting piece of news to my attention.
Morgan and Morgan say that FXCM are "the nation's largest Forex dealer", but they don't say how they came to that conclusion. There are lots of ways of doing that calculation, but personally I'd prefer to settle for "one of the largest US retail forex dealers" instead. Be that as it may, Morgan and Morgan are acting on behalf of:
William H. Sanders, of Muscogee, Oklahoma, and all other similarly situated FXCM customers
and are:
Accusing FXCM of fraud by misrepresenting itself as a trading platform that is free from dealer intervention or manipulation. Instead, Sanders alleges, FXCM uses a number of devices and tricks, including software applications, designed specifically to interfere with customers' trades.
Recently the NFA fined GAIN Capital and Ikon for their use (and alleged abuse) of the infamous MetaTrader 4 Virtual Dealer plugin, so quite possibly Morgan and Morgan are going to pursue a similar angle in this case? The press release certainly alleges :
That FXCM engaged in a pattern of racketeering activity by collaborating with its software developers and programmers to develop a "diabolical" software application that provides FXCM with a myriad of tools and system commands with which to interfere with customers' trades, including routing trades to "slow" servers and sending false "error" messages when customers attempt to close out profitable trades.
What with one thing and another I can't help thinking that this won't be the last lawsuit directed at US forex brokers both large and small during 2011.
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Comments on FXCM Accused of Fraud in Class Action Lawsuit
FXCM have now responded to what they describe as "a purported class action lawsuit" on the investor relations section of their website. They say that:
No surprises there.
@Jim: I just spent 3 days trading on FXCM trading platform. I have woken up every day, and studied where the market is posibly adhering to, then with my knowledge i logged into my fxcm account and started trading. No matter how calculated you are prepared and have confidence that you will earn money trading on the fxcm trading platform, YOU WILL LOSE. FXCM IS A SCAM, try it for yourself, but i warned you. I had 24/7 access for 3 days, i traded on every hour, they have a system deviced to work against you, you will gain only 2% and then later even that 2% you will not reap, they will steal your money. Dont, Dont even try it. The only people who make money are brokers and they are the real people behind FXCM, and if you have a broker i give you a good advice, fire that scammer. They are all gonna lie to you, they are stealing your money.
I'm surprised at how much attention this is getting. Last summer the NFA fined Gain for introducing a delay into EVERY trade. If, during the delay, the price went against the customer the trade was filled at that price. If, however, the price went in favor of the customer they would reject the request. http://www.nfa.futures.org/news/newsRel.asp?ArticleID=3676. They also changed the leverage every Friday without informing their customers. I've been waiting for FXCM to get fined for similar practices.
Hi Mike,
Isn't the idea with a class action to get as much attention as possible, in order to get as many other aggrieved people as possible to jump on board?
Your link is to the same case I mentioned in the article I linked to above. Like I said, maybe Morgan & Morgan will be trying a similar approach here to the one the NFA used with GAIN and Ikon? Alternatively maybe the NFA know something Morgan & Morgan and William H. Sanders do not? Maybe No Dealing Desk means no virtual dealer plugin either, for example?
In any case it will certainly be very interesting to watch how all these assorted legal measures ultimately pan out.
Jim
I have personal experience with FXCM platform on 28/02/2010 on pair GBP /AUS their spread was 56 pips.
I didn't see such high spread in my whole life…………………..Radiculus
YES, FXCM is scamm.They will encourage IB( introducing broker),after getting some clients they will throw the IB like anything.How they will throw: they will each and every client of the poor IB and ask them "is your ib person is trading onbeharlf of you? He is a fruad, we are calling client service department,do u want to leave your ib:. their ultimate aim is to grab that clients in their coustody and not pay ib commission.
Hi Sajith,
To some extent this sort of thing is an inevitable result of brokers complying with the CFTC's regulations on registration of IBs.
That doesn't mean some brokers don't have other motives apart from complying with the law though!
Jim
Also they say you if have 5000. Min balance on the 30th of each month you will not be charged for their IE problem is they have never used an type of monitoring to ensure that!!! They wait until a customer complains,,,!before deducting the amount! Their operations is a big joke!!!! Inexperienced overpaid robots!!!
Hi FIADS,
Surprisingly enough I have tried it for myself! However "having confidence" is not the same thing as having a profitable trading system. From your description it sounds more like your trading methodology is at fault rather than your broker.
Can you provide evidence of exactly what went wrong in any greater detail?
Jim
Are you serious.. or over 18 at least?
The confidence takes no part in forex… you can test ANY broker and have 500% confidence level on a direction of a certain pair… but at the end what matters is the direction of that pair…
Sure there are brokers out there that can scam you intro showing you wrong charts, creating barriers for you to withdraw money…. close accounts saying that you are using a strategy that they don't allow… and so on…
but FXCM is NOT a scam broker… if you lost your money with them.. we ALL would be very thankful to you if you could POST your trade statement… for all of us could have a good LOL at it OR if you want to LEARN something… we can help you based on what you did wrong.. but from what appeared to me… 3 days… and account wipe is simply pure MATH… you have a bag and you put money, CONFIDENCE and DUMBness, STUPIDness and then. you mix it all up.. and you have a…. wait for it…. MARGIN CALL.
Think about it… if confidence was the secret ingredient for trading forex…. CHUCK NORRIS would be so rich by now.. trading it.
Edgar F.
Hi Edgar,
So we're agreed then?