The legal representatives of My Forex Funds and its CEO Murtaza Kazmi responded to all the allegations made by the Commodity Futures Trading Commission (CFTC) and categorically denied them.
According to the 41-page motion filed in a US court yesterday (Tuesday), “the CFTC is unlikely to succeed on its allegations because MFF never solicited or accepted any investments from its clients or engaged in retail transactions in foreign currency or , indeed, any dealings with retail investors.”
The CFTC initially filed suit against two entities called Traders Global Group, one based in New Jersey and the other in Canada, operating as My Forex Funds, and Kazmi, who controlled them as CEO. With many allegations, the gist of the regulatory action is that Traders Global is a fraudulent organization.
The defense denies all charges
In a recent response, attorneys for My Forex Funds and Kazmi questioned the CFTC’s jurisdiction over the prop trading platform, stating that “transactions between MFF and its clients fall outside the scope of the Commodity Exchange Act’s (CEA) anti-fraud provisions, registration requirements and bans on over-the-counter trading.’
“But even if these provisions apply, the CFTC’s allegations lack factual support,” the defense motion added.
Murteza Kazmi, CEO of My Forex Funds
The court filing detailed My Forex Funds’ business model, noting that the platform “paid out tens of millions of dollars to clients in accordance with rules it established and which were agreed to by its clients.” It further points out that the CFTC has failed to produce evidence from even one distressed customer of My Forex Funds.
“Delivering exactly what one promises is not cheating; it’s good business,” the proposal said. “The CFTC cannot prove otherwise.”
One of the main defenses of My Forex Funds lawyers is that clients have never invested their own funds. Company money was always used to fund all accounts. The clients agreed to “serve as independent contractors providing commercial services to MFF.” It also revealed that a significant portion of the trading activities were conducted on simulated accounts.
“To the extent that CFDs and FX contracts existed – and most were only simulated – they were entered into solely by MFF, using equity, with CDO Markets,” the proposal states.
In addition, the proposal emphasizes that the CFTC must prove the making of a misrepresentation, misleading statement or fraudulent omission, scienter and materiality to support allegations of fraud. However, according to the defendants, the regulator did not establish any of them.
Removal of preliminary injunction
With a previous court order, the CFTC was able to freeze the assets of My Forex Funds as well as Kazmi’s personal assets. The court also appointed a temporary receiver. However, according to the defendants’ lawyers, the “pre-freezing of assets is an ‘extraordinary remedy.’
“The court should reject the CFTC’s motion for a preliminary injunction as unnecessary to preserve the defendants’ assets,” the motion states. “Even if the Court were to decide that some injunction was appropriate, however, that order should be limited to freezing all funds causally related to the alleged violation so that they could be subject to relief (which the defendants contend is not the case). “
Under this argument, the exemption amount should not be more than $10,370,878.10, representing MFF’s gross profits earned by traders in the live trading environment who are not eligible for payment. On top of that, the proposal states that such traders account for only 6% of all MFI accounts, the most over time.
In an earlier motion, the defense said the CFTC “recklessly mischaracterized the transfers to and from the defendants’ bank accounts to the SRO [statutory restraining order] was introduced.”
It further emphasized that any ban should only apply to MFF’s corporate entities and not to Kazmi personally.
The legal representatives of My Forex Funds and its CEO Murtaza Kazmi responded to all the allegations made by the Commodity Futures Trading Commission (CFTC) and categorically denied them.
According to the 41-page motion filed in a US court yesterday (Tuesday), “the CFTC is unlikely to succeed on its allegations because MFF never solicited or accepted any investments from its clients or engaged in retail transactions in foreign currency or , indeed, any dealings with retail investors.”
The CFTC initially filed suit against two entities called Traders Global Group, one based in New Jersey and the other in Canada, operating as My Forex Funds, and Kazmi, who controlled them as CEO. With many allegations, the gist of the regulatory action is that Traders Global is a fraudulent organization.
The defense denies all charges
In a recent response, attorneys for My Forex Funds and Kazmi questioned the CFTC’s jurisdiction over the prop trading platform, stating that “transactions between MFF and its clients fall outside the scope of the Commodity Exchange Act’s (CEA) anti-fraud provisions, registration requirements and bans on over-the-counter trading.’
“But even if these provisions apply, the CFTC’s allegations lack factual support,” the defense motion added.
Murteza Kazmi, CEO of My Forex Funds
The court filing detailed My Forex Funds’ business model, noting that the platform “paid out tens of millions of dollars to clients in accordance with rules it established and which were agreed to by its clients.” It further points out that the CFTC has failed to produce evidence from even one distressed customer of My Forex Funds.
“Delivering exactly what one promises is not cheating; it’s good business,” the proposal said. “The CFTC cannot prove otherwise.”
One of the main defenses of My Forex Funds lawyers is that clients have never invested their own funds. Company money was always used to fund all accounts. The clients agreed to “serve as independent contractors providing commercial services to MFF.” It also revealed that a significant portion of the trading activities were conducted on simulated accounts.
“To the extent that CFDs and FX contracts existed – and most were only simulated – they were entered into solely by MFF, using equity, with CDO Markets,” the proposal states.
In addition, the proposal emphasizes that the CFTC must prove the making of a misrepresentation, misleading statement or fraudulent omission, scienter and materiality to support allegations of fraud. However, according to the defendants, the regulator did not establish any of them.
Removal of preliminary injunction
With a previous court order, the CFTC was able to freeze the assets of My Forex Funds as well as Kazmi’s personal assets. The court also appointed a temporary receiver. However, according to the defendants’ lawyers, the “pre-freezing of assets is an ‘extraordinary remedy.’
“The court should reject the CFTC’s motion for a preliminary injunction as unnecessary to preserve the defendants’ assets,” the motion states. “Even if the Court decides that some kind of injunction is appropriate, however, that order should be limited to freezing all funds causally related to the alleged violation so that they can be subject to relief (which Defendants argue they are not.” “
Under this argument, the exemption amount should not be more than $10,370,878.10, representing MFF’s gross profits earned by traders in the live trading environment who are not eligible for payment. On top of that, the proposal states that such traders account for only 6% of all MFI accounts, the most over time.
In an earlier motion, the defense said the CFTC “recklessly mischaracterized the transfers to and from the defendants’ bank accounts to the SRO [statutory restraining order] was introduced.”
It further emphasized that any ban should only apply to MFF’s corporate entities and not to Kazmi personally.