XTX lawyers urge court to deny Currenex’s dismissal motion

Plaintiffs accuse platform of trying to split case across jurisdictions, which could lead to inconsistent decisions

Southern District Court of New York

Lawyers representing XTX Markets and two other financial firms have asked a New York court to deny a motion from Currenex to dismiss the proposed class-action lawsuit it is facing, arguing that the FX trading platform is trying to split the case, which could yield conflicting legal results.

Currenex and its parent company State Street filed a motion in March asking the Southern District Court of New York to toss out the complaint for a lack of personal jurisdiction. They argued that the matter is best heard by a UK court since XTX and Currenex signed a 2016 agreement for services promising to submit exclusively to English courts for any controversy that arises from the contract.

Currenex and State Street are among a group of high-profile defendants that include Goldman Sachs, HC Technologies and up to five unnamed sources who are accused of fraud, conspiracy, antitrust violations and racketeering resulting from secret deals that allegedly gave a narrow subset of liquidity providers (LPs) unfair bidding advantages on the platform.

The plaintiffs’ lawyers are pouring cold water on the so-called forum selection defence, telling the judge overseeing that case that XTX is not asserting a breach of contract against the platform. Rather, that XTX’s claims stem from two specific practices that constitute a violation of legal duties that are independent of the 2016 contract – that the defendants had an always-win tie-breaking rule and that administrator access was allegedly given to HC Tech, a high-frequency trading firm that is a competitor.

The plaintiffs claim these practices were never disclosed to other users of the Currenex platform. Additionally, they argue that by working with the trading defendants to make prices on the platform artificial and by issuing misleading marketing materials, Currenex violated many legal duties that exist independently of its contract with XTX.

“What Currenex wants is for the court to dismiss only a slice of this case – only plaintiff XTX’s claims, and only those brought against Currenex. Both US and English courts recognise the impropriety of slicing up a larger dispute into pieces, particularly where, as here, it could lead to inconsistent results,” wrote attorneys at law firms Quinn Emanuel Urquhart & Sullivan and Ruddy Gregory in a May 20 opposition.

The firms also stated that “New York is where the majority of the events giving rise to the claim occurred. And New York is also where the majority of claims are going to be litigated, regardless of the outcome of this motion” – further signalling that the agreement’s forum clause is irrelevant.

XTX, one of the three largest LPs in the $6.6 trillion a day currency market, joined the lawsuit in February and is looking to become a co-lead plaintiff in the case. XTX is said to have conducted an average of $1.5 billion in FX trades daily via Currenex during the class period, according to court documents.

XTX’s involvement in the lawsuit raises the stakes of a complaint that was originally brought by Edmar Financial Company and Irish Blue & Gold – two relative unknowns in the market – last August.

In a separate motion opposing the defendants’ request for the court to dismiss all the allegations against them for a failure to state a claim, the plaintiffs told the court that those involved in the operation of the Currenex platform perpetrated a “massive fraud”.

They also argued that it is undisputed that the case has been adequately pleaded when it comes to matters such as the tie-breaking rules that are important to traders but were not disclosed.

“The court’s task here is easier than it is in many fraud cases,” the plaintiffs say. “This is because defendants tacitly concede that the complaint adequately pleads the dispositive facts. … the defendants knew the platform’s trump-card tie-breaking rule was that a trading defendant would win every tie. But the trading defendants’ always-win tie-breaking rule was never disclosed.”

Currenex and the other defendants have until July 18 to submit a reply.

State Street and XTX declined to comment.

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