CFTC vs. My Forex Funds – Where Things Stand September 2024I thought I would write up this very quick summary of what’s going on with the My Forex Funds case. I’ve been closely following the case and adding any significant (and some not so significant) updates to my Twitter account, if you want the most up-to-date info.
Table of Contents
Upcoming hearing – September 19
These things keep getting delayed, but as of right now, there is a hearing scheduled for September 19th.
On the agenda is MFF’s request that the CFTC be penalized for a “mistake” they made in their initial charges against MFF. When they first froze all of MFF’s assets and shut down the business, the CFTC asserted that they had to do so because the CEO of MFF, Murtuza Kazmi, had transferred $35 million to a personal account. This was not true. That $35 million was actually a tax payment.
The question is, when did the CFTC know that this was simply a tax payment? MFF claims they knew before they made the charges, but made the false claim about the personal account in order to shut down the business.
Over the last few months, MFF and the CFTC have been arguing about what documents the CFTC should produce in order to determine when they knew it was only a tax payment and if they intentionally lied. If they did lie, they should be penalized by the court in this next hearing.
Most recent developments
The CFTC agreed to hand over most of the documents MFF requested — mostly emails between CFTC staffers and attorneys — but were very protective of a group of documents related to the CFTC’s internal response to their error about the $35 million. The CFTC claimed these documents were privileged, but MFF argued that at the very least, the judge should be able to review the documents in camera and assess if they are privileged and relevant to the sanctions hearing.
After a lot of letters back and forth, the judge agreed with MFF and will review the documents himself. If they are as damning as MFF hopes, this could lead to very harsh penalties against the CFTC.
Summary of MFF’s claims for sanctions
In MFF’s most recent letter they very clearly laid out why they think the CFTC should be penalized. Bear in mind, of course, that this is from MFF’s perspective, but they make a pretty compelling case. Here’s the letter in full in PDF format:
What’s next?
First the judge has to decide what, if any, penalties should be assessed against the CFTC. That hearing is supposed to start September 19 and conclude within a few days.
Once the judge makes that decision, next up is MFF’s motion to dismiss. I have not yet seen a timeline for when that hearing will begin. If the judge dismisses all charges, which seems unlikely, MFF could theoretically go back into business, although they would face a lot of challenges in terms of finding trading platform partners and restoring their reputation. Plus, since MFF had a headquarters in Canada, they also have to fend off similar charges from Canadian regulators.
If the judge does not dismiss the charges and both parties decide it is worth it to go all the way to trial, that trial probably would not begin until the third or fourth quarter of 2025. Those looking for a faster resolution to this case should hope for the motion to dismiss or that the parties decide on a settlement rather than a full trial.
Link to prop trading comparison site
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