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FXDD和FXCM涉嫌欺诈面临集体诉讼

FXDD和FXCM涉嫌欺诈面临集体诉讼 对于不诚实的外汇做市商,常见的欺诈手段:虚假宣传、控制服务端、滑點、断线、修改订单等。
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FXDD和FXCM这次面临集体诉讼,不知能否逃过此劫。目前FXCM股价大受影响。

FXCM’s class action suit

A few days ago I reported that FXCM was slapped with a class action suit over alleged fraud and racketeering. Today I bring you the full lawsuit document. Here are some of the more interesting details and you can read it in full yourself in the below embedded document.1 e' v- Z; N2 r/ }  E& ?0 p2 e
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The Plaintiff, William H. Sanders, claims to have lost over $150,000 to FXCM over the years due. Two main topics the lawsuit deals with is the Demo accounts which serve to attract clients while not simulating real market conditions and when clients do switch to live they receive completely different execution and the execution itself where it is claimed that FXCM is in fact a market maker which actively goes after profitable clients. The main excerpts are below:6 D  ]2 E& n: o6 ^4 h2 d
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Plaintiff, William H. Sanders, just like thousands of other customers, was lured into transacting business with Defendant, FXCM, buying and selling foreign currencies in what is known as the foreign exchange (“Forex”) market, but little did Sanders, or any of the others, know that FXCM intended to, and did, systematically bilk them out of their account money through an elaborate scheme of fraudulent tricks, devices, and artifices. What was represented to Sanders and others as a foreign currency trading platform developed upon professed principles of “fairness, honesty, and integrity,” which was supposedly rooted in providing customers with a true market trading experience, totally devoid of dealer intervention and market manipulation, was in truth a platform predicated upon deceit and trickery that systematically looted the accounts of customers who, like Sanders, placed their trust in FXCM.8 O% d$ R* ~1 P, `7 K. w

; F- K! p' E5 h+ q8 u7 `" \The scheme deployed by FXCM was complex and varied, utilizing aggressive and pervasive marketing and advertising campaigns, including television, internet, seminars, webinars, and other media, portraying FXCM as a foreign currency trading platform where investors could trade foreign currencies in a true market environment. The advertisements were specifically targeted to convey a sense of trust and transparency to potential FXCM customers and to gain the customers’ confidence in FXCM’s trading platform. To further bolster customers’ confidence in its platform, FXCM enticed customers to use FXCM’s practice or demo account (hereinafter, the “Demo Account”) to simulate an FXCM trading experience. But the Demo Account, just like the myriad advertisements, misled customers about the true nature, functionality, and performance of the platform. Once lured into opening an account, customers were subjected to a staggering array of stratagems and ploys, some using extremely sophisticated computer software based upon complex algorithms and high-speed computers, to deceive the customers into believing that their trading was being affected by normal market forces, while in reality FXCM traded against its own customers.# ~" i' B, c6 a& |5 l* k

# M. k1 K  ?, x  A  U9 a8 j7 C/ B+ dAnd the so-called “Demo Account” – which was held out by FXCM as the sine qua non to persuade prospective customers to trade with FXCM – was the most cunning and crippling canard of all. By trading through the “Demo Account” without being at financial risk, the customer was allowed to experience direct market pricing, free from FXCM dealer interference or manipulation. The switch pulled by FXCM on how trading occurs once the customer opens a “live” account and starts trading with real money, is nothing short of a modern-day equivalent of the classic street con game known as “Three-card Monte.” Once “live” trading began, direct market pricing was replaced by profound dealer interference and trade manipulation.
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To further its fraudulent practices, FXCM associated with software developers and programmers to create and deploy one of the most sinister software applications ever imagined, the central component of which included a back-end administrative console that provided FXCM an arsenal of system commands to facilitate FXCM’s fraud on customers. For example, through this console, FXCM can prevent the customer from closing out a profitable trade; hold up a trade so that FXCM can pirate the profit by trading against the customer; or manipulate the price of the market by utilizing “flash” trades to artificially move a market to close out a customer’s “stop order.” FXCM deployed these technological tricks to separate customers, like Sanders, from their money.8 k: j: d" S8 C
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Defendant further deceives customers by failing to disclose its dishonest practices in its disclaimers contained in Defendant’s customer agreements. Buried in the  fine print of Defendant’s lengthy, misleading, contradictory, and largely incoherent computer-generated customer agreement, Defendant purports to innocuously “disclose” and “disclaim” to the customer that, at times, the Defendant may act as a “principal” in transactions, which may result in the customer’s not getting the “best price” on certain trades. In fact, Defendant does not act as a “principal” in a “market” at all; rather, the Defendant acts as a well-armed and unscrupulous adversary to its customer, with superior knowledge, a technological advantage, one which ignores its own Code of Conduct, and which intentionally defrauds unwitting customers., \0 t& u& l! w+ N) i8 y3 B% O6 T
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Defendant has worked with software companies and individual software programmers to modify its back-end systems and middleware to enable it to engage in the dishonest trading practices described below. Defendant has modified its trading platform so that many of these dishonest trading practices are applied to a customer’s account by automated computerized algorithms. Through this association, Defendant has also modified its trading platform to include a sophisticated back-end administrative console which provides Defendant and its employees a series of system commands designed, each accessible through a drop down menu, to execute many of the dishonest trading practices described below. All of these software modifications have been implemented by Defendant to prevent customers from making money and to cause customers to lose money to Defendant.
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6 ^( v3 _) ~; }4 O6 @% F% ]Defendant’s dishonest trading practices include, but are not limited to, the following:+ H3 a% E7 I( W
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a. Slow Server Command: When a customer is engaged in profitable trading activity, Defendant routes the customer’s account to a “slow server,” causing trade execution to be slowed down, and allowing Defendant the time to hijack any potential profit in the trade by buying and selling in-between the customer’s order and the real market, with Defendant’s taking any profit and leaving the customer victimized with no money for his or her effort;) ]  |, s# E+ K. T4 u! d5 X

8 i+ I# |8 K# Rb. False “Error” Messages: Defendant uses its administrative back-end software to prevent the customer from closing out a profitable trade and instead causes the trading system to generate any one of a series of “error” messages to the customer, blocking the customer’s efforts to finalize what would have been a profitable order;8 f9 C) p' t, ^' n+ i/ L/ S3 k

/ \* G: s% I( M7 g1 Sc. Flash Trades: Defendant, in a practice known as “stop hunting,” manipulates the market price of the traded currency, including printing bogus “flash trades” which move the “market” to trigger the customer’s stop order for a given trade, essentially closing the customer out of that trade;
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/ r/ \& u+ ?7 B$ P: d6 nd. Arbitrary Margin Rules: Defendant arbitrarily changes the margin rules on Fridays for an ensuing week without any notice to the customer, which results in the customer’s being deprived of any trading advantages or leverage opportunities they may have, and again causing the customer’s account to be closed out in favor of Defendant;
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e. Abuse of “Slippage”: Defendant, in a practice known as “slipping a trade,” takes advantage of “slippage” in a given trade. “Slippage” is the change in price between the time when a price is quoted and a market order is placed. It is customarily caused by market movement while the trade is being executed. The incidence of “slippage” should roughly be equal in favor of the customer and the broker. Defying all laws of probability, in almost every case, Defendant’s customers suffer losses as a result of “slippage” at grossly greater percentages than Defendant does, which can only be explained by Defendant’s manipulation of pricing; and
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4 j4 x( t4 p! x( b# b0 N9 F7 B“Slow Fill” and “No Fill” Commands: Defendant often fails to execute valid and profitable trade orders entered by the customer and instead causes the trading system to generate a “slow fill” or “no fill” message to the customer as the customer attempts to close out a profitable trade, preventing the customer from making a profit while generating illicit profits for Defendant.
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FXDD slapped with class action suit as well

Morgan Business Trial Group have announced that they sued FXDD as well. Details of the case are pretty much similar to FXCM’s. In basis of the complaint is the allegedly aggressive and misleading marketing by FXDD as well as that it is in fact  a market maker which goes after its clients and doesn’t STP all orders as it claims. The Plaintiff Hugo Cruz has allegedly lost almost $300,000 due to these practices.1 ?/ {2 P4 N4 }

  p8 p8 [: M$ C3 Y+ K5 g8 xThe lawsuit, filed on February 11 in the United States District Court for the Southern District of New York (Manhattan Division), is the second class action lawsuit filed by the firm against Forex dealers in the past week, alleging fraud, deceptive trade practices, and racketeering. On February 8, The Business Trial Group filed a similar case against Forex Capital Markets, LLC (FXCM). As in the FXCM case, the suit alleges that FXDD has defrauded thousands of customers using deceptive and unfair trade practices, including falsely portraying its Forex trading platform as “transparent,” when instead it is a “rigged game,” designed to systematically separate customers from their money.
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The Plaintiff, Hugo Cruz, brought the action on behalf of himself and all other similarly situated FXDD customers, accusing FXDD of fraud by misrepresenting its trading platform as one that is free from dealer intervention or manipulation. Instead, Cruz alleges, FXDD uses a number of devices and tricks, including software applications, designed specifically to manipulate and interfere with customers’ trades.6 g; D$ z* v* d; i2 ~

( L- y3 `. \% s1 NLike the FXCM case, the suit alleges that FXDD uses specially designed software to manipulate trading and “loot” its customer accounts, and also that FXDD lures its customers by promoting a “demo account,” which was touted as providing customers with a true market trading experience. Instead, the suit alleges, the demo account does not reflect what FXDD does when the customer begins “live” trading.2 D4 L. z6 {( A: j+ ^9 r4 l
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Lead Trial Counsel Tucker H. Byrd, of the Morgan & Morgan Business Trial Group of Orlando, Florida, stated, “We are continuing to bring legal action for redress of wrongs that we believe have occurred to thousands of Forex customers for years by dealers who have been entrusted with their customers’ money. Unfortunately, many Forex dealers engage in questionable practices, and we intend to pursue any and all of them until we have put an end to these abuses.”
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