TFS-ICAP’s CEO Ian Dibb suffers bitter blow in NY Court

Dibb has failed to secure partial dismissal of the complaint brought against him by the CFTC.

Ian Dibb, the CEO of TFS-ICAP, who is among the defendants in a case brought by the United States Commodity Futures Trading Commission (CFTC), was dealt a bitter blow earlier this week, as the Court denied his motion for a partial dismissal of the complaint.
The CFTC Complaint alleges that from approximately 2008 through 2015, brokers at TFS-ICAP offices in the United States and the United Kingdom attempted to deceive and deceived their clients by engaging in the practices of communicating to them fake bids and offers and fake trades in the foreign exchange options market. The CFTC Complaint alleges that the practices, known as “flying prices” and “printing trades”, were a core part of TFS-ICAP’s broking business.
Dibb has tried to dismiss the allegations in Count III of the Complaint, which, according to him, relies on a misapplication of Section 4( c )( a) of the Commodity Exchange Act, which proscribes anti-competitive efforts to generate “fictitious sales” or record prices that are not bona-fide.
In relevant part, Section 4c(a) of the Act renders it unlawful to “offer to enter into, enter into, or confirm the execution of a transaction” that is “a fictitious sale; or [that] is used to cause any price to be reported, registered, or recorded that is not a true and bona fide price”.
The Court, however, was not persuaded by Dibb’s arguments and denied his motion.
According to the Court, Dibb’s first argument is that the Complaint “fails to allege pre-arrangement or private, collusive, or anticompetitive activity on the part of TFS’s brokers.” The plain terms of the statute do not require collusion, the Court ruled.
Dibb’s second argument is that the Complaint is deficient because it fails to allege that the trading practices “dampened the forces of supply and demand, or permitted TFS to ‘evade the competition of the open market.’”
Dibb argues that the practice of flying prices and printing trades actually “spark[ed] market interest and fuel[ed] market activity, which resulted in more competition.” This argument, the Court said, is meritless. Dibb does not clearly explain how publishing fictitious transactions on a trading platform would facilitate competition in a manner approved of, permitted by, or even contemplated in the CEA. If Congress intended to create such a safe harbor, surely it would have clearly stated so in the statutory text, the Court concluded.
As the defendants have failed to dismiss the CFTC Complaint, they will now have to respond to the allegations. As FinanceFeeds reported, the defendants are set to submit their responses not later than February 21, 2020.