Robbins Arroyo LLP: FXCM Inc. (FXCM) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a federal securities fraud class action complaint has been filed in the U.S. District Court for the Southern District of New York. The complaint alleges that officers and directors of FXCM Inc. (NYSE: FXCM) violated the Securities Exchange Act of 1934 between June 11, 2013 and January 20, 2015, by making materially false and misleading statements about FXCM’s business prospects. FXCM provides online foreign exchange (FX) trading and related services to retail and institutional customers worldwide.
FXCM Failed to Maintain Sufficient Capital Reserves
According to the complaint, defendants touted FXCM’s agency model of FX trading as being extremely low-risk and proclaimed that volatility in FX markets was uniformly good for FXCM’s business. Additionally, FXCM expressed confidence in the capability of its proprietary technological platform, and stated that it maintained sufficient regulatory capital reserves for unforeseen scenarios. However, FXCM’s agency model did not insulate it from financial risk from its heavily leveraged clients, nor did it maintain sufficient regulatory capital reserves. Because of these misrepresentations, FXCM’s positive statements about its business, operations, and growth lacked a reasonable basis.
On January 15, 2015, when the Swiss National Bank announced that it was removing the cap on the Swiss franc-euro exchange rate, the franc jumped 41% against the euro. Shortly thereafter, FXCM announced that its customers suffered cumulative losses of $225 million and that it was in danger of not meeting its regulatory capital requirements. Then, on January 16, 2015, FXCM announced that it received a $300 million loan from Leucadia National Corp. to avoid the regulatory default and possible bankruptcy. The terms of the loan were “highly punitive” and eliminated nearly all shareholder value in FXCM. Later that day, trading of FXCM stock was suspended. When trading of FXCM stock resumed on January 20, 2015, the stock price closed at $1.60, down over 90% from a close of $12.63 on January 15, 2015.
FXCM Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.