The reality is that any FXCM customer must sign a client agreement where
FXCM. clarifies with uppercase what risk you take as a customer.
So the question is whether inadequate to misleading information on FXCM’s website, FXCM videos, and FXCM representatives incomplete information capacity will have something to say in the justice system when it is so clearly written in FXCM client agreement.
The most interesting is about FXCM will get their 220 million back from the thousands of spurned FXCM customers.
Right now FXCM X number lawyers who checks out if that is any point and worth to claim back the negative balance from client from China, Singapore Russia, Japan, korea, blabla …
Oanda and Dukascopy have found out that it has no intention … Mass Media will create a huge negative publicity.
The large customer group will be observant that FXCM treat their customers badly,
Future and current customers will find other brokers
When bad stories coming out in the media …
It is probably one of the reasons that we awaiting a final state ment from FXCM that they will bite the apple finally …
[QUOTE=“torulf39;679578”] The reality is that any FXCM customer must sign a client agreement where FXCM. clarifies with uppercase what risk you take as a customer. So the question is whether inadequate to misleading information on FXCM’s website, FXCM videos, and FXCM representatives incomplete information capacity will have something to say in the justice system when it is so clearly written in FXCM client agreement. <img src=“301 Moved Permanently”/> The most interesting is about FXCM will get their 220 million back from the thousands of spurned FXCM customers. Right now FXCM X number lawyers who checks out if that is any point and worth to claim back the negative balance from client from China, Singapore Russia, Japan, korea, blabla … Oanda and Dukascopy have found out that it has no intention … Mass Media will create a huge negative publicity. The large customer group will be observant that FXCM treat their customers badly, Future and current customers will find other brokers When bad stories coming out in the media … It is probably one of the reasons that we awaiting a final state ment from FXCM that they will bite the apple finally …[/QUOTE] True but consumer law in the US is very clear that one cannot make a direct claim, then simply contradict it with a disclaimer. Because if that were legal, every company would be making outrageous claims, then contradicting them with small disclaimers hoping that no one see the disclaimers and make their decisions based off the outrageous claims.
So legally FXCM has opened a can of worms upon themselves by making the statement that they guarantee no client will lose more then they deposit, even though they have disclaimers stating otherwise.
All over the world wide web FXCM was proclaiming that clients enjoyed negative balance protection (NBP). So FXCM was either, at best, misinforming prospective, new and existing clients or at worst said clients were being conned - since you either offer NBP or you don’t. No amount of fine print or legalese is going to save anybody from this PR disaster…
IMPORTANT NEWS REGARDING YOUR FXCM TRADING ACCOUNTS
Please be advised that in order to offset negative balances you currently hold in your FXCM account(s), FXCM has transferred funds from your account(s) with a positive balance. The terms of your master trading agreement entered into with FXCM, available online, provide FXCM with these rights.
If after this transfer you still maintain a negative balance on your account, you are requested to remit funds immediately. FXCM accepts deposits by, debit card, bank wire and ACH electronic check. All options can be accessed via our www.myfxcm.com portal.
As you may already be aware, last week, the Swiss National Bank (“SNB”) announced that they will no longer support a self-imposed floor on the EUR/CHF exchange rate. Learn More.
The SNB announcement, extreme price movements and the resulting lack of liquidity were exceptional and unprecedented events causing many market participants to incur trading losses. These events were unforeseen and beyond the control of FXCM, constituting force majeure events.
Record of this transaction is available by generating a Combined Account Statement and referencing the description “Offset Transfer from Account to Account for Negative Balance”.
FXCM thanks you for you cooperation and understanding.
If you have any questions, please contact one of our specialists, who are available 24 hours a day, by live chat, by calling 1-888-503-6739, or by e-mail at <[email protected]>
FXCM hereby reserves all rights and remedies that it may have at law, in equity, under the terms of any contracts with you. Nothing in this notice shall be deemed to constitute a waiver or settlement of any of FXCM’s rights and remedies.
EXNESS in complete contrast to FXCM
Exness would like to respond to numerous appeals from traders in the aftermath of the Swiss franc’s “lift-off” on January 15.
Remember that as a consequence of the abrupt increase the Swiss franc’s exchange rate relative to the main global currencies, which was caused by the Swiss National Bank’s decision to abandon the cap on the CHF/EUR exchange rate, on January 15, 2015 many forex traders incurred heavy losses, leading not only to stopped-out transactions but also resulting in negative account balances, in some cases measured in hundred of thousands of USD.
Unlike most market participants, our company never requires reimbursement for losses from clients who have “gone into the red”. In other words, under no circumstances will our clients be in a situation where they will “owe the company money”. This is properly stipulated in the Group’s General Business Terms (par. 2.6 (d) of EXNESS (CY) LTD’s terms, par. 23.4 of EXNESS LIMITED’s terms): “If a Stop Out execution has resulted in the negative equity of the Client’s trading account, it will be compensated so as to bring Equity to $0.”". Thus, our company always automatically compensates for negative balances in our clients’ accounts.
“We believe that compensating for clients’ negative balances is a perfectly acceptable practice and have no intention of abandoning it. The trading on the forex market undoubtedly entails high risk, but traders should not incur losses beyond the amount of their deposits in their trading accounts,” said Petr Valov, Director of EXNESS. “I must note that the events that have taken place in the market may impact many forex companies’ policies as well as traders’ preferences. Among brokers, the STP (Straight Through Processing) model had previously been believed to be ‘risk free’. However, the sharp rise in the Swiss franc’s exchange rate and the resulting losses have shown that trading on market maker accounts (where positions are not always sent directly to the market) may be preferable for private clients, because it gives the broker much greater ability to control risks.”
Today the situation on the financial market is relatively stable, and many traders have already resumed trading financial instruments with CHF.
While FXCM is shooting itself in both feet dont be fooled by these B-book brokers waxing lyrical about their superior risk management processes that they may have in place or their almost philanthropic approach to the whole debacle. First, it is very easy to be forgiving of negative balances if it’s not you nursing a quarter of billion dollar big black hole in your balance sheet. Second, the reality is that market makers were for the most part just incredibly lucky to have emerged from the CHF carnage relatively unscathed - some even made a good few pennies. Their survival in this case had more to do with the fact that (by definition) they take the opposite side of your trades and it so happened that clients were net long on chf pairs. Things may well have worked out very differently if clients were net short…
The thing that really sucks for people who had accounts with FXCM during this is that not all brokers failed. I understand there should be an expectation of a lot of slippage but saying that there was no liquidity in the market during the event is simply not true. There were very wide prices on other platforms but there were prices there. Really people got burned super hard by FXCM’s stp process being **** and whatever liquidity provision they have with the banks to offset that risk. I really don’t feel like if you had a stop in place then you shouldnt be expected to take on 3000 or more pips slippage. They had a systematic business failure and expecting customers to pay for most of it I don’t think is right.
I absolutely agree; it was indeed a catastrophic failure on FXCM’s part. And It’s nothing short of a disgrace for them now to be pursuing clients with negative equity and seeking “force majeure” protection after ‘seducing’ clients with negative balance protection ‘guarantees’. Yes, this event may have had a “force majeure”/“act of god”-like impact but it doesn’t automatically mean that “force majeure” offers them relief in a court of law. Accurate risk analysis or a more robust risk mitigation strategy may have gone a long way in preventing losses on this scale.
[QUOTE=“Shinshiro;679772”] I absolutely agree; it was indeed a catastrophic failure on FXCM’s part. And It’s nothing short of a disgrace for them now to be pursuing clients with negative equity and seeking “force majeure” protection after ‘seducing’ clients with negative balance protection ‘guarantees’. Yes, this event may have had a “force majeure”/“act of god”-like impact but it doesn’t automatically mean that “force majeure” offers them relief in a court of law. Accurate risk analysis or a more robust risk mitigation strategy may have gone a long way in preventing losses on this scale.[/QUOTE] They will have a difficult time claiming “force majeure” as it can be pointed out that other brokers saw the storm coming, lowered the max leverage available to their clients trading the CHF, and weathered the storm just fine.
Wouldn’t signing the contract be different from a disclaimer? Everything torulf39 posted was from the terms of the contract and the customers signature would be on the final page of the contract? If that is the case, then this wouldn’t be viewed the same as a disclaimer like on a movie or a web page.
Has this gone out to all customers with accounts in debt? To all account types?
Has anyone that has a account in debt just tried asking FXCM to review your own personal case and put forward what proof you have that there was liquidity in the market? Its worth a shot.
I’m sure everyone would like it if stops where guaranteed but maybe even in the Babypips school it warns that they are not?
Maybe FXCM might review any stops in play if you can show there was some liquidity available at a different level. Might not get your stop filled but might be worth trying to get some of the slippage back.
Keep in mind also that these other brokers may have been taking the other side of the clients position and never sending any client positions to market at all! It would be extremely easy for them to forgive any client account debt past clearing the clients account out because that broker is never out of pocket because the client position was not in the open market. All they would be forgiving is the extra profit they would get for the client account going into debt. They can still offer liquidity or the appearance of it because its a closed system always inside the company and even widen the spreads to increase profit for themselves more.
FXCM Client positions were in the market. The other thing to keep in mind is that even if FXCM were to get all the outstanding monies from clients in debt, the loan they have had to take out to cover those positions will end up costing far more then the $300M. This may be a driving force also for them to push to get these outstanding amounts back and also the lender may have set out in the loan agreement that these had to be pursued. All these things could add up to it being a harder fight to even get a opposing view heard by the company but that doesn’t mean that anyone out of pocket shouldn’t at least ask them.
Someone had posted up a link talking about the costs associated with chasing these debts and maybe there are agreements that can be voluntarily entered into to reduce the outstanding amounts. If you don’t have the money to cover it all, some paid back has to be better then nothing if all. The costs associated with trying to recover can be done away with from the start for that customer and the company makes a saving there.
Now FXCM’s risk disclosure statement aside, let’s - as a matter of interest - take a look at the definition of fraudulent misrepresentation:
Under contract law, a plaintiff can recover against a defendant on the grounds of fraudulent misrepresentation if
(1) a representation was made
(2) that was false;
(3) that when made, the representation was known to be false or made recklessly without knowledge of its truth; B that it was made with the intention that the plaintiff rely on it;
(5) that the plaintiff did rely on it; and
(6) that the plaintiff suffered damages as a result.
[/B]
[B]FXCM to Forgive Majority of Clients Who Incurred Negative Balances[/B]
NEW YORK, Jan. 28, 2015 (GLOBE NEWSWIRE) – FXCM Inc. (NYSE:FXCM), announced today its decision to forgive approximately 90% of its clients who incurred negative balances in certain jurisdictions, on January 15, 2015 as a result of the Swiss National Bank announcement on that date. FXCM will notify the applicable clients and adjust applicable client account statements in the next 24-48 hours. “FXCM worked diligently to reach this decision and we are extremely appreciative of our clients for their patience and loyalty as we worked through this,” said Drew Niv, CEO of FXCM.
The SNB announcement, extreme price movements and the resulting lack of liquidity were exceptional and unprecedented events causing many market participants to incur trading losses. These events were unforeseen and beyond the control of FXCM.
FXCM will also notify certain clients (such as institutional, high net worth, and experienced traders who generally maintain higher account balances) requesting payment of negative balances, pursuant to the terms of the FXCM master trading agreements. This group represents approximately 10% of clients who incurred negative balances which comprises over 60% of the total debit balances owed.
As a publicly traded company, please understand there are some things which I can’t discuss until the information is ready for release on a wide basis so thanks for your patience. Those of you with a negative balance should be receiving an email today.
Just received a email saying:
…
Negative Balances Update
One of the most pressing issues following the SNB historical decision to remove the 1.20 floor on the euro has been to work diligently to reach a decision on client Debit Balances following that event. At this time we are happy to report that FXCM has forgiven the majority of clients who incurred Negative Balances. FXCM has notifed the applicable clients and adjusted client account statements to reflect this decision.
…
I think the part that is important to look at here is under [B]CONTRACT LAW[/B].
A video with information does not mean a contract has been entered into. When signing a contract and everything is written in the fine print of that contract between the 2 parties, then contract law would apply to that contract and what was written in that contract.
Everything else in this case is not a contract and as others have pointed out the disclaimers on the other products or learning material explain this.
Always remember any entity who has a contract drawn up have done it to protect themselves and their interests, not for your benefit or to protect your interests.
I would almost be willing to bet that the branch of the company that deals with teaching materials/education would be a separate legal entity from the company you signed the contract with to trade and would mean there would be no recourse available against the contract in any case if pursued because a video said something different. All companies do this to different extents.
