The New Jersey court has partially granted My Forex Funds Assets Release request in the lawsuit filed by the Commodity Futures Trading Commission (CFTC) against the company. The court has ordered the release and return of most of the assets belonging to Founder and CEO Murtuza Kazmi, valued at approximately $100 million. However, $12.08 million of these assets will remain frozen.
Moreover, the court decided to discharge the current temporary receiver and ruled against appointing a new one, adding another layer of complexity to the legal proceedings.
This legal battle originated in September when the CFTC filed a complaint against My Forex Funds, its CEO, and associated entities, alleging fraudulent activities exceeding $300 million. The complaint centered around deceptive practices related to leveraged retail foreign exchange and leveraged retail commodity transactions.
Ian McGinley, the Director of Enforcement at the CFTC, emphasized the regulatory commitment to combat retail fraud, stating, “The CFTC’s case against My Forex Funds’ defendants is emblematic of our commitment to stamping out retail fraud in our markets.”
Court Partially Grants My Forex Funds Assets Release
In response, My Forex Fund contested the allegations, claiming that the CFTC “recklessly mischaracterized transfers” involving significant tax payments. Kazmi and his legal team challenged the fundamental aspects of the lawsuit, raising questions about the alleged fraudulent activities and the jurisdiction of the CFTC over its transactions.
A critical point in the defense strategy revolves around the revelation that customers allegedly never invested their funds; instead, the company’s capital funded all accounts. Customers were purportedly independent contractors engaged in trading services, with a significant portion conducted on simulated accounts.
The CFTC’s complaint exposed a series of deceptive practices, including terminating customer accounts under false pretexts, misleading commission assessments, and utilizing specialized software to execute customer orders at unfavorable prices. These practices, according to the complaint, worked against customers, reducing profits and increasing losses, while My Forex Funds claimed to prioritize customer success.
The legal ramifications extend beyond U.S. borders, as the Ontario Securities Commission issued a temporary cease trade order against Traders Global Group Inc. and Kazmi, indicating an international ripple effect of the alleged fraud.
My Forex Funds’ defense also contested the nature of the statutory restraining order, arguing that shutting down a business and freezing personal assets is an extreme measure. They maintain that the CFTC misrepresented substantial pre-authorized payments as transfers to the CEO. This asserts that these funds were directed to the Canadian tax authorities.
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