Shortly after Effex Capital, which was involved in FXCM’s exit from the US retail Forex market, filed a motion to reopen its defamation lawsuit against the United States National Futures Association (NFA), the Court has outlined certain deadlines.
The Honorable Andrea R. Wood of the Illinois Northern District Court has directed the defendants to file a response to the motion by February 9, 2022. The plaintiffs will have to file a reply by February 16, 2022.
As FNG has reported, Effex and its principal John Dittami are trying to revive a lawsuit that was initially opened in June 2017 and has to do with the contents of the materials that NFA published when it settled the matter with FXCM back in 2017.
Let’s recall that Effex filed an action in the Illinois Northern District Court against NFA asserting six counts, including but not limited, to tortious interference and defamation.
Effex contends the NFA Decision contained unopposed unappealable findings against Effex even though:
- NFA had no jurisdiction over Effex;
- Effex was not a party to the NFA Investigation;
- Effex was not allowed to participate in the NFA Investigation;
- Effex was not subpoenaed to testify or produce documents in the NFA Investigation; and
- Effex had no right to appeal or contest the NFA Decision.
Effex further contends that:
- the Release and Narrative contained false and defamatory statements about Effex; and
- NFA’s expressly referencing Effex in the NFA Publications constituted de facto regulation of Effex.
On April 5, 2018, Plaintiffs’ claims against NFA were dismissed by the District Court which found that Plaintiffs failed to exhaust their administrative remedies. Such dismissal was upheld on different grounds by the United States Court of Appeals for the Seventh Circuit, which found that Plaintiffs’ claims were preempted by the Commodities Exchange Act (CEA).
Thereafter, Plaintiffs sought relief before the CFTC which declined jurisdiction stating that Plaintiffs claims were outside NFA’s zone of interest.
Now, as Effex and Dittami seek to reopen the lawsuit, they claim that if their request for relief is denied, they will be precluded from even attempting to obtain relief for the pecuniary and reputational damage they incurred due to the allegedly false and defamatory statements.
The plaintiffs reiterate that they were excluded from the underlying NFA Investigation and have no ability to reopen the NFA Investigation to even clear their names as recently determined by the CFTC Order.
Effex and Dittami conclude:
“If the Court denies Plaintiffs’ application, then NFA and other SROs will be given a license to harass and intimidate persons over whom they have no jurisdiction without any oversight or deterrent. Indeed, it will allow NFA and other SROs to use their authority and power to squelch competition with their members”.