FXCM Potentially Defrauds Investors and Stock Loses 90% of its Value In A Single Day

Chimicles & Tikellis LLP (“C&T”) is investigating potential federal securities claims involving FXCM Inc. on behalf of investors who purchased FXCM securities prior to January 16, 2015 for violations of Sections 10(b)/Securities and Exchange Commission Rule 10b-5 and 20(a) of the Securities Exchange Act of 1934 resulting from significant losses following FXCM’s announcement that it was unable to meet capital requirements.

On January 15, 2015, the Swiss National Bank (“SNB”) announced that it would be discontinuing a monetary policy instituted by SNB in 2011 that involved a cap on the value of the Swiss franc as pegged against the euro set at 1.20 Swiss francs per 1.00 euro.  On January 15, 2015, SNB unexpectedly removed its cap on the value of the franc, causing the franc to surge in value as much as 41 percent, the largest single-day gain of any currency and, conversely, the largest single-day loss to the euro.

While SNB’s announcement was a surprise, FXCM’s stockholders were even more surprised to learn that SNB’s discontinued use of a cap could force FXCM into liquidation and sent its stock in a downward spiral, losing nearly 90% of its market value in a single day.

Contrary to Company disclosures that it is primarily a “riskless principal” that had adopted “fairly conservative margin policy,” the Company (and its investors) had considerable skin in the game.  Investors were unaware of the enormity of the Company’s risk exposure to a single currency pairing (franc to euro), an exposure that the Company knew was ballooning by the Fall of 2014 and put the Company to the brink of a collapse. Investors were not informed that the Company was using its own balance sheet as a back stop to its customers’ gambling losses, or that customers were required to put forth a mere 2% of the value of their investment (even in cases involving the Swiss franc, where the price was synthetic and manipulated by SNB monetary policy).

Upon extensive review of the filings the Company made with the Securities and Exchange Commission in the last three years, we believe that the Company omitted material information about its risk exposure and made false and misleading statements in public filings about its risk management, leverage and margin policies. While the Company warned that its risk management may be deficient, this partial disclosure was itself insufficient and fraudulent in that the Company knew of the tremendous exposure to the franc which was an artificially set price.

Based on the filings and disclosures to date, C&T concludes that there are viable federal securities claims against FXCM and certain of its officers and directors that should be pursued by investors who purchased FXCM common stock from March 31, 2011 through January 15, 2015, including those who purchased in any offerings during that same time frame.

NOTE:  To date, no cases have been filed against FXCM and therefore no one is seeking to represent the rights of investors in a proposed class action.  If you are interested in learning more about our investigation and your legal rights, please contact us immediately.

If you purchased stock in FXCM prior to January 14, 2015, please use the “Email us about this Case” button below to contact the attorneys or call us at (610)642-8500.