In re Global Brokerage, Inc. f/k/a FXCM Inc. Securities Litigation

Background

This securities class action concerns alleged misrepresentations by FXCM Inc. about a profit-sharing arrangement with one of its primary liquidity providers. After discovery ended, the defendants moved for summary judgment on all of the plaintiffs’ claims. The Court denied that motion in an August 17, 2022 order and later explained its reasons in an oral ruling.

The defendants then moved to certify the August 17 order for interlocutory appeal. An interlocutory appeal is an appeal before the district-court case is finished. The defendants sought review of the Court’s conclusion concerning loss causation—the requirement that the alleged misrepresentations caused the plaintiffs’ losses.

Legal Standard

Under 28 U.S.C. § 1292(b), a district court may certify an order for interlocutory appeal only if the order involves a controlling question of law, there is substantial ground for disagreement about that question, and an immediate appeal may materially advance the end of the litigation. Certification is discretionary, and interlocutory appeals are generally disfavored.

Court’s Analysis

The Court held that the defendants failed to satisfy all three requirements.

First, the Court ruled that the loss-causation issue was not a controlling question of law. The relevant question was whether disclosure of regulatory penalties was a confounding event that had to be separated from losses caused by the alleged fraud. The Court viewed that as a factual question for the jury, not a pure legal question that an appellate court could decide without reviewing the record. The Court also noted that even if the issue were legal, it would not necessarily control the litigation because a jury could still determine that some part of the stock-price decline was caused by disclosures about the alleged fraud.

Second, the Court found no substantial ground for disagreement. The defendants had not identified meaningfully conflicting authority. The Court rejected their reliance on one cited decision as foreclosing the plaintiffs’ approach to proving loss causation. It also concluded that cases requiring consideration of confounding factors did not establish that regulatory penalties must always be treated as confounding events and separated as a matter of law.

Third, the Court ruled that an immediate appeal would not materially advance the litigation. Because trial was scheduled to begin in less than four months, granting the motion would more likely delay than advance the case’s conclusion.

Disposition

Judge Ronnie Abrams denied Defendants’ Motion to Certify the Court’s August 17, 2022 Order for Interlocutory Appeal. The opinion does not state a ruling on the merits of the underlying securities claims in this order.