Currenex and LPs move to dismiss class-action lawsuit from US

Defence lawyers say XTX is trying to dodge agreements that it would settle any complaint in UK courts

US-District-Court
Southern District Court of New York

Foreign exchange trading platform Currenex and its parent company State Street have requested a New York court to dismiss an amended class-action complaint brought against them, arguing that the court lacks personal jurisdiction and that a UK court is better suited to hear the case.

Currenex, State Street, Goldman Sachs, HC Technologies and up to five unnamed defendants are the target of a lawsuit filed in August last year that alleges fraud, conspiracy, antitrust violations and racketeering resulting from secret deals that gave a narrow subset of liquidity providers (LPs) unfair bidding advantages on the platform.

Last month, XTX Markets joined the class-action lawsuit originally brought by Edmar Financial Company and Irish Blue & Gold – two relative unknowns in the market – accusing Currenex of having long-running secret priority arrangements with several LPs and of granting admin-level access to high-frequency trading firm HC Technologies.

In a motion to dismiss with prejudice filed on March 18, lawyers at Ropes & Gray representing Currenex told the Southern District Court of New York that both XTX Markets and State Street Global Markets, owned by State Street Europe, are UK corporations and that XTX is attempting to evade a previously signed agreement in which it had arranged to handle any dispute with the platform within the UK court system.

Defence lawyers for the LPs were equally robust in their request for the court to throw out each of the claims with prejudice, citing what they say are a number of defects with a lawsuit that has been amended to include a “hodgepodge of secondary liability claims” that fail make their case.

“Despite amending their complaint, plaintiffs have done nothing to cure the fundamental defects in their grab bag of federal statutory and state common-law claims,” stated a memorandum submitted with the motion to dismiss.

“Plaintiffs try to dress up the alleged tie-breaking preference as a bid-rigging conspiracy – a per se antitrust violation – but they fail to allege any evidence of a horizontal agreement among the defendants, which is the essential ingredient for a bid-rigging claim. To the contrary, new allegations in the [amended complaint] that Currenex granted different preferences to different trading defendants effectively concede that the trading defendants were in competition with one another, underscoring the implausibility of the alleged conspiracy.”

The defence also argued that because State Street operates the Currenex platform in Europe, the case should be dismissed on forum non-conveniens grounds – that it should be brought in a more appropriate court.

To bolster this argument, the defence provided the court with an agreement for services between XTX and Currenex signed in 2016 that contained a clause stating it is governed by and construed in accordance with English law.

David Newns, who was global head of Currenex, and Andonis Sakatis, head of business development at XTX Markets, signed the agreement in September 2016. Newns signed the document on behalf of both State Street Global Markets International in London and Currenex in New York, according to the court documents.

Currenex alleges that both parties agreed to submit to the exclusive jurisdiction of English courts for the adjudication of any case or controversy arising under the agreement and waived their right to a trial by jury in any such litigation.

Defence lawyers said XTX is now seeking to disregard that agreement so it can act as a putative class representative in a complaint that needed to be cured of its “fatal defects” when it was first filed last year.

“When this action was originally filed on August 4, 2021, neither XTX nor State Street Global, the only non-US entities to this action, were named as parties. In response to defendants’ motion to dismiss the original complaint—and seeking to try to cure the fatal defects in the subclass plaintiffs’ claims – XTX and State Street Global were added as parties to the [amended complaint] filed on January 6, 2022,” the motion read.

XTX is the only plaintiff that allegedly traded on the platform after April 2016 and State Street Global’s only alleged involvement in the case is that it signed the agreement with XTX through which XTX accessed the platform from England. Despite its specific agreement to bring any claims in an English court, XTX now seeks to evade its agreement and pursue claims in this court,” it added.

The defence said there would be no inconvenience for XTX if the case is litigated in England, nor would the firm be deprived of adjudicating its claims. They also reminded the district court that the Second Circuit Court of Appeals in New York has a strong policy of honouring forum selection clauses made in arm’s-length negotiations.

“In addition, the court lacks personal jurisdiction over non-resident State Street Global, a foreign corporation operating and existing under the laws of England that offers electronic trading platform services only in certain parts of Europe and does not offer its services in the United States,” the motion stated.

“None of the plaintiffs, including XTX, have alleged that they transacted any business with State Street Global in New York or anywhere in the United States. The only allegation in the [amended complaint] concerning State Street Global is that it entered into an agreement with XTX in England to provide services in the ‘United Kingdom,’ which does not create personal jurisdiction over State Street Global in this court under any applicable jurisdictional statutes or the United States Constitution.”

XTX Markets did not reply for comment at the time of publication.

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