In a recent legal development, Murtuza Kazmi, the Founder and CEO of My Forex Funds, is set to receive approximately $100 million of his assets, but a significant portion, precisely $12.08 million, remains frozen. The court's decision comes in the wake of a lawsuit filed by the Commodity Futures Trading Commission (CFTC) alleging fraud by My Forex Funds.

The New Jersey Court's Decision

The New Jersey court made a partial ruling in favor of My Forex Funds, ordering the release and return of most of Murtuza Kazmi's assets, valued at around $100 million. However, a substantial sum of $12.08 million remains frozen pending further legal proceedings.

This decision also upheld the 'prima facie' evidence submitted by the CFTC, supporting their allegations of fraud against My Forex Funds and its CEO. The term 'prima facie' denotes that the evidence presented is sufficient to establish a case unless proven otherwise.

Background of the Legal Battle

The legal battle between My Forex Funds and the CFTC began when the CFTC filed a complaint in late August, accusing the company and its CEO of fraudulent activities exceeding $300 million. The allegations primarily revolved around deceptive practices related to leveraged retail foreign exchange and leveraged retail commodity transactions.

Ian McGinley, the Director of Enforcement at the CFTC, emphasized the importance of their case, stating, "The CFTC’s case against My Forex Funds' defendants is emblematic of our commitment to stamping out retail fraud in our markets. Anyone offering or entering into leveraged retail forex contracts without registration, or offering or entering into leveraged retail commodity contracts off-exchange, is acting in clear violation of the law."

My Forex Funds' Defense

In response to the CFTC's allegations, My Forex Funds and Murtuza Kazmi mounted a defense. They challenged the CFTC's characterization of transfers, particularly those involving significant tax payments. The defense team raised questions about the legitimacy of the CFTC's jurisdiction over the company's transactions and vehemently denied the accusations of fraudulent activities.

Furthermore, My Forex Funds questioned the CFTC's jurisdiction over its transactions, contending that they never solicited or accepted customer investments. The defense team dismissed the CFTC's claims and argued that the company had never engaged in such practices.

Deceptive Practices Unveiled

The CFTC's complaint uncovered a series of deceptive practices employed by My Forex Funds, including the termination of customer accounts under false pretexts, misleading commission assessments, and the use of specialized software to execute customer orders at unfavorable prices.

These practices, as per the complaint, had the detrimental effect of reducing profits and increasing losses for customers, all while My Forex Funds purported to prioritize their success.

International Legal Ramifications

The legal repercussions of this case extend beyond the United States. The Ontario Securities Commission issued a temporary cease-trade order against Traders Global Group Inc. and Murtuza Kazmi, further complicating the legal landscape for My Forex Funds and its CEO.

A Critical Defense Strategy

A crucial aspect of My Forex Funds' defense strategy revolves around the revelation that customers had never invested their funds with the company. Instead, the capital used for trading came from the company itself, with customers serving as independent contractors engaging in trading services, primarily on simulated accounts.

The defense also emphasized the alleged misrepresentation of two substantial pre-authorized payments of $27,000,000 CAD and $4,500,000 CAD, contending that these funds were directed to the Canadian tax authorities. The court upheld this assertion, highlighting discrepancies in the CFTC's calculations.

The Unprecedented Nature of Legal Measures

Throughout the legal battle, questions were raised about the extraordinary nature of the statutory restraining order that led to the freezing of assets and the shutdown of My Forex Funds' business. Critics argued that such measures are extreme and should be used sparingly.

In conclusion, the legal saga between My Forex Funds, Murtuza Kazmi, and the CFTC continues to unfold, with significant financial stakes and international implications. While Kazmi is set to regain control of a substantial portion of his assets, the $12 million that remains frozen represents an ongoing legal challenge that will likely have far-reaching consequences.