An investigation into FXCM turns into a full scale class action suit

Two weeks ago I reported that two different lawfirms are investigating FXCM to determine whether it has violated federal securities

Two weeks ago I reported that two different lawfirms are investigating FXCM to determine whether it has violated federal securities laws by issuing false and misleading statements to its shareholders.

Only 3 months passed from the Company’s IPO, shares of FXCM closed down 13% today – to a low of $12.05 on heavy volume – following the release of results from last month that were “substantially” below expectations according to one analyst. William Katz at Citi wrote in a note that “the data calls into question our 2011-12 … growth assumptions and begin to suggest greater maturity in the business than previously contemplated.” Moreover, today’s decline comes on the heels of a lawsuit filed by an FXCM customer last week alleging fraud and racketeering, claiming that the Company has bilked thousands of customers out of hundreds of millions of dollars using deceptive and unfair trade practices.

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And now Kahn Swick & Foti, LLC (“KSF”) and KSF partner, Former Attorney General of Louisiana, Charles C. Foti, Jr., announce the commencement of the firm’s securities class action lawsuit against FXCM Inc. (“FXCM ” or the “Company”) (NYSE: FXCM). The lawsuit was filed in the United States District Court for the Southern District of New York on behalf of purchasers of FXCM common stock pursuant to its December 2010 Initial Public Offering (“IPO” or “Offering”) of 15,060,000 shares of common stock (with an overallotment option of 2,259,000 shares), priced at $14.00 per share.

This is then a second class action suit filed against FXCM after the first one was filed by the Morgan Business Group over charges of alleged racketeering and fraud.

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Update:

FXCM Inc. (NYSE: FXCM) announced that a purported class action lawsuit was filed in the United States District Court for the Southern District of New York against the company and certain of its officers and directors and three of the underwriters in the company’s Initial Public Offering (IPO). The complaint alleges false or misleading statements in the IPO prospectus, and seeks unspecified damages on behalf of persons who purchased the company’s Class A common stock.

The company stated that it strongly believes the case that was filed is completely without merit and that the company intends to vigorously defend itself against all of the allegations in the complaint.

Drew Niv, CEO of FXCM commented: “It is a regrettable fact of public company life that even a temporary stock price decline often leads to class action litigation. FXCM will always defend itself against these types of meritless claims and I am confident this case will be dismissed.”

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