If you are a currency trader or retail investor who has suffered losses on margin with a Futures Commission Merchant (FCM) or a Retail Foreign Exchange Dealer (RFED), you may be subject to arbitration brought by the FCM or RFED to recover the outstanding margin debt (also known as a “margin debit” balance) against you.
Trading currencies and engaging in Forex transactions generally carry high degree of risk. The potential risks and rewards of these transactions are amplified by the use of “margin”. Margin is a loan from a brokerage firm like Interactive Brokers to its customers, to help “leverage” the value of the currency transactions they place. As a general rule, the more leverage that is employed the greater potential returns an investor or trader may experience based on the amount of capital invested. In other words, the amount of margin may be small relative to the value of the foreign currency purchased. This means that if the market moves with the trader, they may proportionately larger gain on the funds invested. However, if the market moves against a trader, they may have losses that are greater in proportion to the total amount of money invested. If there is a significant market event, investors and currency traders using margin therefore can not only sustain a total loss of initial margin funds, but may be called upon to pay additional funds to maintain their position (a “margin call”). If the trader or investor does not satisfy the margin call, the brokerage firm may liquidate the trader’s position and will have the right to pursue the trader or investor for the unpaid balance (referred to as a “margin debit” or “margin debt”).
If you are subject to an NFA arbitration for a margin debit balance or other margin debt, certain defenses and offsets may be available to you. These defenses include standard contract defenses such as accord & satisfaction, offsets, payment, discharge in bankruptcy, real party in interest defense, unclean hands, res judicata, statute of limitations, fraud, good faith & fair dealing, mitigation & unfair enrichment, unconscionability, improper venue, as well as other claims or defenses under the Commodities Exchange Act (CEA) or other regulations. However, a skilled NFA arbitration or commodities attorney can help you navigate the NFA arbitration process to help give you the best possible resolution to your margin debt or margin debit arbitration.
If you are an investor or trader that is being sued in NFA arbitration for a margin debt or margin debit arbitration or lawsuit, please contact Kons Law Offices at (312) 757-2272 for a FREE, NO OBLIGATION consultation to discuss your legal rights.
Kons Law Offices represents investors nationwide in NFA arbitration and commodities litigation matters. To learn more about the Firm’s securities and commodities litigation and arbitration practice, please visit www.investmentlossattorney.com