US law firm Bragar Eagel & Squire has launched an investigation on potential claims against forex brokerage FXCM Inc. (NASDAQ:FXCM) concerning possible violations of the federal securities laws, the company announced in a statement.
The firm addressed in the statement shareholders of FXCM (which is traded on the NASDAQ) with the plea to contact it if they have been affected by the share price movement on the day after it became clear FXCM is exiting the US market after it lost its authorization for fraudulent practices.
For what it seems, the law firm is seeking to form a collective lawsuit and is looking for
The broker’s share price dropped more than 50% to $3.25 apiece at market opening on Tuesday, the day after the news broke. This was the lowest value FXCM’s shares have hit in the past 18 months. In the preceding day, the broker’s shares closed the trading day at $6.85.
Earlier this week, FXCM announced it is exiting the US market after its local arm Forex Capital Markets LLC got banned by the US National Futures Association (NFA) and agreed to withdraw from registration with the US Commodity Futures Trading Commission (CFTC) and never to seek to register with it. The broker was charged with taking positions against customers, concealing that a key market maker was tightly related to the broker, and misrepresenting its “No Dealing Desk” platform as providing no conflict of interest with customers.
In addition, the broker’s principals made false statements to the NFA in regards to these practices. The brokerage neither admitted nor denied the allegations, but nevertheless agreed on a $7 million settlement.
At the same time, it became clear that FXCM has entered into an agreement to transfer its US clients to Forex.com, a brand operated by forex brokerage house Gain Capital. The deal, which value was not disclosed, it is expected to close by the end of February.