Following coverage of Avail Trading Corp’s chapter 11 filing yesterday, we can now update the story with a company statement received via email.
The firm said in the statement that over the last 10 years it has prided itself on being an IB with integrity and transparency in the industry, regulated by the National Futures Association (NFA). However in 2015 it was subject to litigation brought against it by a client who had incurred trading losses 2012.
According to public documents viewed by Finance Magnates, the litigation referenced appears to be the case of George S. Bos v. Avail Trading Corp. dba ATC Brokers et al., Case No. BC568792, represented by San Diego-based Lendrum Law Firm, as disclosed in Chapter 11 related filings that became public.
The case was described as relating to allegations of constructive fraud and breach of fiduciary duty. Finance Magnates reached out to Lendrum Law Firm around the time of publication but has yet to obtain a comment.
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Investor Losses from Managed Account
The statement described that the client had invested into a managed account of their own choosing and granted the money manager the required trading authorization, yet the money manager subsequently incurred losses that the client later decided to try to recoup via legal action.
The company said that it filed the chapter 11 to protect itself and hired a chief restructuring officer to help strengthen the operations. It says that the filing is not indicative of its financial standing, which was disclosed as part of the chapter 11 process. The move appears to be a defensive manoeuvre against the litigation, and the company plans to continue.
UK not Affected
The statement reiterated that client funds are held by the IB’s broker FXCM, one of the main US forex dealers. Avail Trading Corp plans to continue to operate as usual and will defend the litigation vigorously through the appellate court, according to the statement.
The company also stated that its UK entity – ATC Brokers Ltd. – which is FCA-regulated and holds client funds, adheres to all the related rules regarding segregating retail clients funds from the firm’s own operating capital.
The statement explained that the firm was not affected by the actions of either the filings or litigation, as those actions pertain to the US entity only. We will continue to track this story and its outcomes.