Breaking: US Court Orders Release of Majority of My Forex Funds Founder's Assets

Tuesday, 14/11/2023 | 22:03 GMT by Yam Yehoshua
  • Murtuza Kazmi will receive approximately $100 million, but $12 million remains frozen.
  • The court upheld the "first impression evidence" submitted by the CFTC against My Forex Funds.
My Forex Funds

The New Jersey court, tonight (Tuesday), partially granted My Forex Fund's request in the lawsuit filed by the CFTC against the company. The court ordered the release and return of most of the assets belonging to the Founder and CEO, Murtuza Kazmi, valued at approximately $100 million. However, $12.08 million of these assets will remain frozen.

Despite the partial decision in favor of the defendants, the New Jersey court upheld the 'prima facie' (first impression) evidence submitted by the CFTC to support charges against My Forex Funds and its CEO. My Forex Funds and its CEO. In an earlier motion, the lawyers of the defendants challenged the CFTC's jurisdiction over the prop trading business and the submitted evidences. It is to be noted that 'prima facie' are based on the first observation and are accepted as correct unless proved otherwise.

However, the Judge Zahid Quraishi stated that "the CFTC has made a 'prima facie' showing that Defendants made misrepresentations, misleading statements and deceptive omissions...materiality... [and] scienter."

Putting a Cap on Frozen Assets

The new amount of frozen asset was determined as the judge put a limit to My Forex Funds' profits associated with the 8 percent of customers who had 'live accounts'. The prop trading platform generated about $310 million in fees from all customers and paid out around $159 million. According to the provided evidence, 8 percent of the remaining amount is associated with 'live accounts'.

Additionally, the court decided to discharge the current temporary receiver and ruled against appointing a new one.

"Since the entry of the SRO, Defendants have appeared in the case, retained experienced counsel, complied with the Court’s order to provide the CFTC with an accounting of Defendants’ assets, produced Defendant Kazmi for deposition, and expressed an interest in resolving the case and remediating any potential disclosure issues. Whatever concerns the CFTC initially may have had regarding the likelihood of Defendants dissipating their assets appear to have been substantially reduced," the Judge wrote in the 28-page opinion.

"Likewise, given that the frozen assets may be set aside and that Defendants are represented by experienced counsel, the Court trusts that no receiver is necessary to effectuate the Court’s order."

In late August, the CFTC filed a complaint against My Forex Funds, its CEO, and associated entities, alleging fraudulent activities. This complaint accused the defendants of deceptive practices related to leveraged retail foreign exchange and leveraged retail commodity transactions.

Ian McGinley, the Director of Enforcement at the CFTC, said: “The CFTC’s case against My Forex Funds' defendants is emblematic of our commitment to stamping out retail fraud in our markets. Anyone offering or entering into leveraged retail forex contracts without registration, or offering or entering into leveraged retail commodity contracts off-exchange, is acting in clear violation of the law.”

My Forex Funds' Challenge to CFTC

However, My Forex Fund recently contended that the CFTC "recklessly mischaracterized transfers" involving significant tax payments. Kazmi and his legal team challenged the fundamental aspects of the lawsuit, pitting it with the commodities watchdog. They raised questions about the alleged fraudulent activities.

Additionally, the firm raised questions over the jurisdiction of the CFTC over its transactions. According to a recent report by Finance Magnates, its defense team dismissed CFTC's accusations. It asserted that My Forex Funds never solicited or accepted customer investments.

The CFTC's complaint exposed a series of deceptive practices, including terminating customer accounts under false pretexts, misleading commission assessments, and using specialized software to execute customer orders at unfavorable prices.

Murteza Kazmi, CEO at My Forex Funds

The complaint asserts that such practices actively worked against customers, reducing profits and increasing losses, all while My Forex Funds claimed to prioritize customers' success.

The legal actions extend beyond US borders. The Ontario Securities Commission has issued a temporary cease-trade order against Traders Global Group Inc. and Kazmi.

My Forex Funds' defense maintains that the CFTC misrepresented two substantial pre-authorized payments of $27,000,000 CAD and $4,500,000 CAD as transfers to My Forex Funds' CEO. Contrary to this, the defense contends that these funds were directed to the Canadian tax authorities. The cort has upheld this and pointed to the CFTC's miscalculations.

The motion further questioned the unprecedented nature of the statutory restraining order, arguing that shutting down a business and freezing personal assets is an extreme measure.

Update: This article was revised to add more information.

The New Jersey court, tonight (Tuesday), partially granted My Forex Fund's request in the lawsuit filed by the CFTC against the company. The court ordered the release and return of most of the assets belonging to the Founder and CEO, Murtuza Kazmi, valued at approximately $100 million. However, $12.08 million of these assets will remain frozen.

Despite the partial decision in favor of the defendants, the New Jersey court upheld the 'prima facie' (first impression) evidence submitted by the CFTC to support charges against My Forex Funds and its CEO. My Forex Funds and its CEO. In an earlier motion, the lawyers of the defendants challenged the CFTC's jurisdiction over the prop trading business and the submitted evidences. It is to be noted that 'prima facie' are based on the first observation and are accepted as correct unless proved otherwise.

However, the Judge Zahid Quraishi stated that "the CFTC has made a 'prima facie' showing that Defendants made misrepresentations, misleading statements and deceptive omissions...materiality... [and] scienter."

Putting a Cap on Frozen Assets

The new amount of frozen asset was determined as the judge put a limit to My Forex Funds' profits associated with the 8 percent of customers who had 'live accounts'. The prop trading platform generated about $310 million in fees from all customers and paid out around $159 million. According to the provided evidence, 8 percent of the remaining amount is associated with 'live accounts'.

Additionally, the court decided to discharge the current temporary receiver and ruled against appointing a new one.

"Since the entry of the SRO, Defendants have appeared in the case, retained experienced counsel, complied with the Court’s order to provide the CFTC with an accounting of Defendants’ assets, produced Defendant Kazmi for deposition, and expressed an interest in resolving the case and remediating any potential disclosure issues. Whatever concerns the CFTC initially may have had regarding the likelihood of Defendants dissipating their assets appear to have been substantially reduced," the Judge wrote in the 28-page opinion.

"Likewise, given that the frozen assets may be set aside and that Defendants are represented by experienced counsel, the Court trusts that no receiver is necessary to effectuate the Court’s order."

In late August, the CFTC filed a complaint against My Forex Funds, its CEO, and associated entities, alleging fraudulent activities. This complaint accused the defendants of deceptive practices related to leveraged retail foreign exchange and leveraged retail commodity transactions.

Ian McGinley, the Director of Enforcement at the CFTC, said: “The CFTC’s case against My Forex Funds' defendants is emblematic of our commitment to stamping out retail fraud in our markets. Anyone offering or entering into leveraged retail forex contracts without registration, or offering or entering into leveraged retail commodity contracts off-exchange, is acting in clear violation of the law.”

My Forex Funds' Challenge to CFTC

However, My Forex Fund recently contended that the CFTC "recklessly mischaracterized transfers" involving significant tax payments. Kazmi and his legal team challenged the fundamental aspects of the lawsuit, pitting it with the commodities watchdog. They raised questions about the alleged fraudulent activities.

Additionally, the firm raised questions over the jurisdiction of the CFTC over its transactions. According to a recent report by Finance Magnates, its defense team dismissed CFTC's accusations. It asserted that My Forex Funds never solicited or accepted customer investments.

The CFTC's complaint exposed a series of deceptive practices, including terminating customer accounts under false pretexts, misleading commission assessments, and using specialized software to execute customer orders at unfavorable prices.

Murteza Kazmi, CEO at My Forex Funds

The complaint asserts that such practices actively worked against customers, reducing profits and increasing losses, all while My Forex Funds claimed to prioritize customers' success.

The legal actions extend beyond US borders. The Ontario Securities Commission has issued a temporary cease-trade order against Traders Global Group Inc. and Kazmi.

My Forex Funds' defense maintains that the CFTC misrepresented two substantial pre-authorized payments of $27,000,000 CAD and $4,500,000 CAD as transfers to My Forex Funds' CEO. Contrary to this, the defense contends that these funds were directed to the Canadian tax authorities. The cort has upheld this and pointed to the CFTC's miscalculations.

The motion further questioned the unprecedented nature of the statutory restraining order, arguing that shutting down a business and freezing personal assets is an extreme measure.

Update: This article was revised to add more information.

About the Author: Yam Yehoshua
Yam Yehoshua
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Editor-in-chief | Finance Magnates

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