FXCM (NYSE:FXCM) requested from the Texas Supreme Court on Tuesday to transfer the Revelation Forex client's funds recovery case into arbitration. The appointed receiver of the case is Kelly Crawford, who accused FXCM in 2013 of providing the convicted Kevin G. White with aid that helped him conduct and carry out numerous violations, citing gross oversight of fraud and a failure to prevent losses to investors.
White previously operated Revelation Forex Fund LP, that captured nearly $7.4 million in investments – citing the court order, he pled guilty in December 2013 to numerous charges of fraud, including mail fraud and the embezzlement of approximately $1.8 million in client funds.
White additionally plead guilty to accusations of losing upwards of $4 million of client funds, an operation that Crawford felt ultimately should have been noticed and prevented. The allegations also targeted FXCM trader Brian Hinman, the suit claiming that he illegally posed as a trader at Revelation to fabricate a trading history for the firm using his personal account.
FXCM's agreement with Revelation Forex included an arbitration clause and the broker now says the court should respect that and send the case to arbitration as the receiver is acting on behalf of the Forex Revelation estate and therefore bound by its agreements.
The broker said: “The court of appeals ignored the fundamental principle that the claims here belong to, and can only be brought on behalf of, the receivership estate. Because of this established principle, the receiver ‘stands in the shoes’ of that estate when asserting these claims and is subject to the contractual Obligations of the estate, including the arbitration clause.”
Crawford's attorney Charlene Koonce saw this argument as faulty, he said Wednesday: “The receiver is asserting only claims assigned to him by investors who never signed an arbitration agreement with FXCM. The trial court denied FXCM’s attempt to compel arbitration and the court of appeals denied FXCM’s appeal. FXCM’s appeal to the Supreme Court is a further attempt to delay having the compelling merits of the investors’ claims heard by a jury, and we believe the Texas Supreme Court will likewise deny relief."
