FXCM Inc (NYSE: FXCM) Investor Securities Class Action Lawsuit 03/03/2011

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Company Name(s): 
FXCM
Case Name: 
FXCM Shareholder Class Action Lawsuit 03/03/2011
Case Status: 
Case Dismissed
Affected Securities
NYSE: FXCM
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
03/03/2011
Class Period Begin: 
12/01/2010
Class Period End: 
02/08/2011
Court of Filing: 
U. S. District Court for the Southern District of New York
Deadline To File for Lead: 
05/02/2011
Case Dismissed: 
07/01/2011
Summary: 

July 1, 2011 - The parties filed a stipulation of dismissal with prejudice.

March 3, 2011 - An investor in shares of FXCM Inc (NYSE: FXCM) filed a lawsuit in the U.S. District Court for the Southern District of New York against FXCM Inc alleging violations of Federal Securities Laws following a lawsuit by a customer alleging violation of the Racketeer Influenced and Corrupt Organizations Act.

According to the complaint the plaintiff alleges that FXCM Inc, its Board of Directors at the time of the IPO, and the certain Underwriters involved in the December 2010 Initial Public Offering violated the Securities Act of 1933 by including or allowing the inclusion of materially false and misleading statements in the Registration Statement and Prospectus. In early December 2010, FXCM Inc sold more than 15 million shares at the price of $14 per share in its IPO. Shares of FXCM Inc (NYSE: FXCM) then rose on December 3, 2010 to $15 and then decreased on December 20 to as low as $12.21 per FXCM share.

Specifically the lawsuit alleges that Defendants each failed to conduct an adequate due diligence investigation into FXCM Inc prior to the December 2010 IPO, and they also each failed to reveal, at the time the December 2010 IPO closed that FXCM Inc was not proceeding according to plan, that FXCM’s growth and trading volume had slowed or weakened by the time of the December 2010 IPO, which would make it impossible for FXCM Inc to achieve its projected results sponsored and/or endorsed by Defendants prior to and at the time of the IPO. Moreover, Defendants failed to disclose the true nature of its operations.

Then on February 10, 2011, FXCM Inc disclosed that it was sued in the U.S. District Court for the Southern District of New York by a customer alleging claims under Federal and New York State law with respect to trading through FXCM Inc's platforms.

The consumer alleges that FXCM Inc has been engaged for years in a fraudulent scheme in violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) that has “bilked thousands of customers out of hundreds of millions of dollars,” in part by using software designed “to interfere with customers’ trades.”

Equities research analyst William Katz at Citi Investment meanwhile cut earnings estimates for the Company for 2011 and 2012, and lowered the price target for the stock from $18 to $14. Katz wrote in a research note that the year-to-date data have raised questions about growth assumptions for FXCM Inc this year and next year, and “begin to suggest potentially greater maturity in the business than previously contemplated.”

After the announcements FXCM Inc (NYSE: FXCM) shares fell to under $12.