Forex Capital Markets, Llc v. Kelly M. Crawford, Receiver ( 2015 )

FILED
15-0131
2/17/2015 1:27:24 PM
tex-4174474
SUPREME COURT OF TEXAS
BLAKE A. HAWTHORNE, CLERK
NO. _________
IN THE
SUPREME COURT OF TEXAS
AUSTIN, TEXAS
FOREX CAPITAL MARKETS, LLC,
Petitioner,
v.
KELLY M. CRAWFORD, RECEIVER,
Respondent.
PETITION FOR REVIEW
OF COUNSEL: Christopher H. Rentzel
(Application for admission Texas Bar No. 16785500
pro hac vice forthcoming) Kevin T. Schutte
Texas Bar No. 24033050
Lloyd A. Kadish BRACEWELL & GIULIANI LLP
Illinois Bar No. 01378767 1445 Ross Avenue, Suite 3800
LLOYD KADISH & ASSOCIATES, LTD. Dallas, Texas 75202
345 North Canal Street, Suite 901 Telephone: (214) 468-3800
Chicago, Illinois 60606 Facsimile: (800) 404-3970
Telephone: (312) 559-9181 christopher.rentzel@bgllp.com
Facsimile: (312) 264-0470
lkadish@aol.com Yvonne Y. Ho
Texas Bar No. 45055673
BRACEWELL & GIULIANI LLP
711 Louisiana Street, Suite 2300
Houston, Texas 77002
Telephone: (713) 223-2300
Facsimile: (800) 404-3970
ATTORNEYS FOR PETITIONER FOREX CAPITAL MARKETS, LLC
IDENTITIES OF PARTIES AND COUNSEL
Petitioner: Forex Capital Markets, LLC
Counsel for Petitioner: Christopher H. Rentzel
Kevin T. Schutte
BRACEWELL & GIULIANI LLP
1445 Ross Avenue, Suite 3800
Dallas, Texas 75202-2711
Telephone: (214) 468-3800
Facsimile: (800) 404-3970
Yvonne Y. Ho
BRACEWELL & GIULIANI LLP
711 Louisiana Street, Suite 2300
Houston, Texas 77002
Telephone: (713) 223-2300
Facsimile: (800) 404-3970
Lloyd A. Kadish
Of counsel (application for admission
pro hac vice forthcoming)
LLOYD KADISH & ASSOCIATES, LTD.
345 North Canal Street, Suite 901
Chicago, Illinois 60606
Telephone: (312) 559-9181
Facsimile: (312) 264-0470
Respondent: Kelly Crawford, Receiver, as Assignee
Counsel for Respondent: Charlene C. Koonce
J. Mitchell Little
SCHEEF & STONE, L.L.P.
2601 Network Blvd., Suite 102
Frisco, Texas 75034
Telephone: (214) 472-2100
Facsimile: (214) 472-2150
TABLE OF CONTENTS
Page
IDENTITIES OF PARTIES AND COUNSEL ........................................................ i
INDEX OF AUTHORITIES................................................................................... iv
STATEMENT OF THE CASE .............................................................................. vii
STATEMENT OF JURISDICTION..................................................................... viii
ISSUE PRESENTED ................................................................................................x
INTRODUCTION ....................................................................................................1
STATEMENT OF FACTS .......................................................................................2
A. The Investors authorized Revelation to engage a broker on their
behalf. ...................................................................................................2
B. Revelation and its successors agreed to arbitrate disputes with
FXCM. ..................................................................................................2
C. As Revelation’s representative and successor, the Receiver sued
FXCM, asserting claims assigned by Revelation’s Investors that
had become property of his estate. .......................................................4
D. The trial court and the court of appeals refused to enforce the
arbitration clause against the Receiver. ................................................5
SUMMARY OF THE ARGUMENT .......................................................................6
ARGUMENT ............................................................................................................7
I. Whether The Receiver Is Bound To Arbitrate Presents A Question Of
Law That This Court Reviews De Novo. .......................................................7
II. The Court Of Appeals Erred By Refusing To Enforce The Arbitration
Clause..............................................................................................................8
A. Legal constraints on the Receiver’s authority bind him to the
arbitration clause, regardless of whether he acquired these
claims by assignment. ..........................................................................9
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Page
B. The Receiver’s obligation to arbitrate these claims predates the
assignments and is thus binding on the Receiver. ..............................14
PRAYER .................................................................................................................17
CERTIFICATE OF SERVICE ...............................................................................19
CERTIFICATE OF COMPLIANCE ......................................................................20
APPENDIX .............................................................................................................21
-iii-
INDEX OF AUTHORITIES
Page(s)
Cases
Akin Gump, Strauss, Hauer & Feld, L.L.P. v.
E-Court, Inc., No. 03-02-00714-CV,
2003 WL 21025030 (Tex. App.—Austin May 8, 2003, no pet.) ................. viii, 9
Cotten v. Republic Nat’l Bank,
395 S.W.2d 930 (Tex. App.—Dallas 1965, writ ref’d n.r.e.) ..................... viii, 10
In re D. Wilson Constr. Co.,
196 S.W.3d 774 (Tex. 2006) (orig. proceeding) .................................................. 7
Finova Capital Corp. v. Lawrence,
No. 399CV2552-M, 2000 WL 1808276
(N.D. Tex. Dec. 8, 2000) ....................................................................................10
Forest Oil Corp. v. McAllen,
268 S.W.3d 51 (Tex. 2008)...................................................................................7
Forex Capital Mkts., LLC v. Crawford,
No. 05-14-00341-CV, 2014 WL 7498051
(Tex. App.—Dallas Dec. 31, 2014) ................................................................... vii
Freedom Commc’ns, Inc. v. Coronado,
372 S.W.3d 621 (Tex. 2012) (per curiam) .........................................................12
Global Drywall Sys., Inc. v. Coronado Paint Co.,
104 S.W.3d 538 (Tex. 2003) ..............................................................................14
Hayes and Co. v. Merrill Lynch,
Pierce, Fenner & Smith, Inc.,
885 F.2d 1149 (3d Cir. 1989) .......................................................................12, 13
J.M. Davidson, Inc. v. Webster,
128 S.W.3d 223 (Tex. 2003) ................................................................................ 8
Janvey v. Democratic Senatorial Campaign Comm., Inc.,
712 F.3d 185 (5th Cir. 2013) ........................................................................10, 16
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Page(s)
In re L&L Kempwood Assocs., L.P.,
9 S.W.3d 125 (Tex. 1999) (per curiam)................................................................ 7
Logan v. JKV Real Estate Servs. (In re Bogdan),
414 F.3d 507 (4th Cir. 2005) ..................................................................10, 11, 16
MCI Sales & Serv., Inc. v. Hinton,
329 S.W.3d 475 (Tex. 2010) ..............................................................................12
Murphy Oil USA, Inc. v. Wood,
438 F.3d 1008 (10th Cir. 2006) ..........................................................................15
Oakes v. Lake,
290 U.S. 59 (1933) ..............................................................................................16
Petrofac, Inc. v. DynMcDermott Petroleum
Operations Co., 687 F.3d 671 (5th Cir. 2012) ..................................................... 8
Prudential Secs., Inc. v. Marshall,
909 S.W.2d 896 (Tex. 1995) ................................................................................ 7
Reneker v. Offill,
3:08-CV-1394-D, 2012 WL 2158733
(N.D. Tex. June 14, 2012) ............................................................................10, 12
Scholes v. Lehmann,
56 F.3d 750 (7th Cir. 1995) ................................................................................10
Scholes v. Stone, McGuire & Benjamin,
821 F. Supp. 533 (N.D. Ill. 1993) .......................................................................10
Seagull Energy E&P, Inc. v. Eland Energy, Inc.,
207 S.W.3d 342 (Tex. 2006) ..............................................................................14
Secs. & Exch. Comm’n v. White
Civil Action No. 4:13-cv-383 (E.D. Tex. July 9, 2013) .................................4, 12
State v. Hogg,
535 A.2d 923 (Md. 1988), abrogated on other grounds,
Dawkins v. Baltimore City Police Dep’t,
827 A.2d 115 (Md. 2003) ...................................................................................15
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Page(s)
United States Commodity Futures
Trading Comm’n v. RFF GP, LLC,
Civil Action No. 4:13-cv-382 (E.D. Tex. July 9, 2013) .................................4, 12
United States Small Bus. Admin. v. Coqui Capital
Mgmt., LLC, No. 08 Civ. 0978,
2008 WL 4735234 (S.D.N.Y. Oct. 27, 2008) ...............................................12, 16
Statutes
9 U.S.C. § 1, et seq.....................................................................................................7
TEX. GOV’T CODE ANN. 22.225(c) ............................................................................ix
TEX. GOV’T CODE ANN. § 22.001(a)(2) ....................................................................ix
Rules
TEX. R. EVID. 201(d) ................................................................................................12
Treatises
COLLIER ON BANKRUPTCY ¶ 323.02[4] ....................................................................13
CORBIN ON CONTRACTS § 51.2 (2014) .....................................................................15
Other Authorities
Details for Forex Capital Markets LLC (NFA ID: 0308179),
National Futures Association, available at
http://www.nfa.futures.org/
basicnet/Details.aspx?entityid=uy8vi7mVysc%3d&rn =Y.................................. 2
RESTATEMENT (SECOND) OF CONTRACTS § 336(4) (1981) ..........................14, 15, 16
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STATEMENT OF THE CASE
Nature of the This dispute pertains to the enforcement of an arbitration
Case: agreement against the receiver for an investment partnership.
Respondent Kelly Crawford, a court-appointed receiver
(“Receiver”) for Revelation Forex Fund, LP (“Revelation”), sued
Petitioner Forex Capital Markets, LLC (“FXCM”), a futures
commission merchant, in a Texas state district court. (CR.11, 301-
02). The Receiver’s claims were allegedly obtained by assignment
from third-party investors who were limited partners of
Revelation. (CR.13). By agreement, Revelation and its “estate, . .
. administrators, legal representatives, [and] successors” must
arbitrate all disputes against FXCM. (App. A at 4 ¶ 23; CR.825
¶ 23; CR.826-27). That same agreement also requires all judicial
proceedings in connection with these transactions to be held in
New York. (CR.826 ¶ 30).
Trial Court: Hon. Jill Willis, 429th Judicial District Court of Collin County,
Texas
Trial Court’s FXCM filed a Motion to Compel Arbitration, pursuant to an
Action: enforceable arbitration agreement. (CR.161-267). In the
alternative, FXCM filed a motion to dismiss based on a mandatory
forum selection clause in the same agreement. (CR.161-267). The
trial court denied both motions on March 7, 2014. (App. B;
CR.1070-71).
Court of Fifth District of Texas at Dallas; Justices O’Neill, Lang-Miers, and
Appeals: Brown
Court of On March 18, 2014, FXCM filed a notice of interlocutory appeal
Appeals from the denial of its motion to compel arbitration. (CR.1102-04).
Disposition: On April 16, 2014, FXCM filed a petition for writ of mandamus
from the denial of its motion to dismiss based on the forum-
selection clause. The court of appeals consolidated both
proceedings. On December 31, 2014, the court of appeals issued
an opinion denying mandamus relief and affirming the order
denying FXCM’s motion to compel arbitration. Forex Capital
Mkts., LLC v. Crawford, No. 05-14-00341-CV, 2014 WL 7498051
(Tex. App.—Dallas Dec. 31, 2014); (App. C, slip op).
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STATEMENT OF JURISDICTION
This petition for review presents the same legal question involving the same
contractual agreement for which Petitioner Forex Capital Markets, LLC (“FXCM”)
has also sought mandamus relief in this Court. See In re Forex Capital Markets,
LLC, No. 15-0128 (Tex. Feb. 16, 2015). Whereas this petition requests that the
Court enforce an arbitration clause in the agreement, FXCM’s petition for writ of
mandamus requests enforcement of a forum selection clause in that agreement.
Yet in both proceedings, the issue is whether an equity receiver can escape the
contractual obligations of the receivership entity he represents, merely because he
purports to be asserting claims assigned to him by third parties.
By allowing Respondent Kelly Crawford (the “Receiver”) to avoid his
contractual obligation to arbitrate, the court of appeals created a conflict with
decisions by Texas courts recognizing that receivers cannot bring claims unless
they are property of the receivership estate. See Akin Gump, Strauss, Hauer &
Feld, L.L.P. v. E-Court, Inc., No. 03-02-00714-CV, 2003 WL 21025030, at *5
(Tex. App.—Austin May 8, 2003, no pet.) (“[A] receiver does not have an
unfettered right to represent creditors and shareholders of a corporation. A
receiver may represent creditors and shareholders only to the extent that the cause
of action seeks to preserve or recover corporate assets.”); Cotten v. Republic Nat’l
Bank, 395 S.W.2d 930, 931 (Tex. App.—Dallas 1965, writ ref’d n.r.e.) (same
-viii-
principle). If the Receiver can only bring assigned claims that are property of the
receivership estate, then he is subject to the contractual obligations of the
receivership entity he represents when asserting these claims—here, the arbitration
(and forum selection) clause. This conflict warrants review. See TEX. GOV’T
CODE ANN. §§ 22.001(a)(2); 22.225(c).
Even if the Court declines to find a direct conflict with prior Texas opinions,
the Court should exercise its equitable power to hold this petition for review until
FXCM’s related petition for writ of mandamus has been decided. Because the
reasons for enforcing the arbitration clause are identical to those raised in FXCM’s
mandamus petition, a hold is warranted to avoid the potential for creating a conflict
in this case regarding the enforceability of interrelated provisions of the same
agreement. Under these unique circumstances, the petition for review should, at
minimum, be held until FXCM’s petition for writ of mandamus is resolved.
-ix-
ISSUE PRESENTED
Whether an equity receiver is required to arbitrate claims procured by
assignment from third parties, when:
a. the assignments made the claims property of the
receiver’s estate and the estate is bound to the arbitration
clause; and
b. the receiver’s obligation to arbitrate this dispute accrued
before he received the assignments.
-x-
INTRODUCTION
The lower courts incorrectly allowed an equity receiver to circumvent his
contractual obligation to arbitrate these claims, merely because he purports to be
asserting claims assigned by third parties. It does not matter that the receiver
purports to bring these claims as assignee because the claims are now the property
of his estate. The receiver is bound to the arbitration clause because he “stands in
the shoes” of the receivership entity which is indisputably bound by it. The
receiver is also bound to the clause under the plain language of the contract.
Established receivership law dictates that a receiver only has the standing to
bring assigned claims if they belong to his estate. Because the claims must now
belong to his estate, the receiver is subject to the contractual obligations of that
estate—including the arbitration clause. Moreover, the contract explicitly provides
that the receiver, as the legal representative or successor of the receivership entity,
is bound to the arbitration clause regardless of how the estate obtained these
claims. This Court should prevent the Receiver from using an “assignment”
strategy to evade his contractual obligations, reverse the court of appeals’
judgment, and enforce the arbitration clause.
STATEMENT OF FACTS
A. The Investors authorized Revelation to engage a broker on their
behalf.
Revelation Forex Fund, L.P. (“Revelation”) is an investment fund that
solicited investors (“Investors”) to purchase limited partnership interests.
(CR.841-74). Revelation’s general partner was RFF GP, LLC, which, in turn, was
solely owned by Kevin G. White (“White”). (CR.835-37, 841).
Before making their investments, the Investors expressly authorized RFF to
make decisions and conduct business on Revelation’s behalf, (CR.854; CR.891-92
§ 10.01; CR.900 ¶ 18), and allowed Revelation to invest on their behalf in accounts
maintained in Revelation’s name. (CR.880 § 2.01(b); CR.900 ¶ 18(b)). Revelation
also advised the Investors it intended to trade foreign currencies (“Forex”), and that
RFF would have exclusive control over that trading. (CR.845, 852-53).
B. Revelation and its successors agreed to arbitrate disputes with
FXCM.
Acting on Revelation’s behalf, White opened an account with Forex Capital
Markets, LLC (“FXCM”), a futures commission merchant that provides online
platforms for Forex trading worldwide. (See CR.822). FXCM is registered with
the National Futures Association and is headquartered in New York City. (CR.826
¶ 28); see also Details for Forex Capital Markets LLC (NFA ID: 0308179),
National Futures Association, available at http://www.nfa.futures.org/
basicnet/Details.aspx?entityid=uy8vi7mVysc%3d&rn =Y.
-2-
To open the account, White executed a Client Agreement in Revelation’s
name (the “Client Agreement” or “Agreement”). (CR.821-38). Pursuant to that
Agreement, Revelation agreed to arbitrate all disputes in connection with its
transactions through FXCM:
[Revelation] agrees and, by opening one or more
accounts for [Revelation], FXCM also agrees, that any
and all disputes, controversies, or claims arising out of
this Client Agreement, or the relationships or activities
contemplated thereby, including whether or not any such
dispute, controversy, or claim is arbitrable, shall be
resolved by an Arbitration Panel selected by the National
Futures Association (“NFA”), pursuant to the NFA’s
Code of Arbitration. The award of the NFA Arbitrators,
or of the majority of them, shall be final, and judgment
upon the award may be entered in any court of competent
jurisdiction.
(App. A at 6; CR.827 (emphasis added)). Revelation also agreed that its estate,
legal representatives, and successors are to be bound to the terms of the Client
Agreement, including the arbitration clause:
This Client Agreement including all authorizations, shall
inure to the benefit of FXCM and its successors and
assigns, whether by merger, consolidation or otherwise,
and shall be binding upon Trader and/or the estate,
executor, trustees, administrators, legal representatives,
successors and assigns of [Revelation] . . . .
(App. A at 4, ¶ 23; CR.825 ¶ 23 (emphasis added)). The Client Agreement also
includes a forum selection clause specifying that any dispute in connection with
the trading transactions must be resolved in New York. (App. A at 5, ¶ 30; CR.826
-3-
¶ 30). Revelation, through White, “acknowledge[d] [its] agreement [with] and
understanding of” these provisions. (CR.834).
C. As Revelation’s representative and successor, the Receiver sued
FXCM, asserting claims assigned by Revelation’s Investors that
had become property of his estate.
As a result of two lawsuits,1 the Receiver was appointed for White, RFF,
KGM Capital Management, LLC, and Revelation. (CR.12, 48, 53, 66). The
Receiver was given the authority to pursue claims and bring actions in connection
with the property of his estate. (CR.45-64; CR.65-81). The Receiver then devised
a plan to obtain assignments from the Investors in order to pursue certain causes of
action in Texas state court. (2RR.21:5-8; CR.452-559).
The Receiver filed this suit against FXCM, (CR.11), purporting to act
“solely” as assignee of all Investors in Revelation. (CR.301-02). The Receiver
alleges that Revelation operated as a fraud, using FXCM as its broker and FXCM’s
employee, Brian Hinman, as its trader. (CR.14). According to the Receiver,
FXCM did not properly supervise Hinman in his efforts to solicit funds and trade
for Revelation. (CR.24-25, 37-38). The Receiver claims that FXCM is liable for
the loss of the funds that the Investors deposited into Revelation. (CR.35-38, 42).
1
Secs. & Exch. Comm’n v. White (“SEC Action”), Civil Action No. 4:13-cv-
383 (E.D. Tex.) (filed July 9, 2013); United States Commodity Futures Trading
Comm’n v. RFF GP, LLC (“CFTC Action”), Civil Action No. 4:13-cv-382 (E.D.
Tex.) (filed July 9, 2013).
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D. The trial court and the court of appeals refused to enforce the
arbitration clause against the Receiver.
FXCM filed a timely Motion to Compel Arbitration under the Federal
Arbitration Act (the “FAA”). (CR.168-71). In the alternative, FXCM filed a
motion to dismiss the Receiver’s suit based on the forum selection clause in the
same Client Agreement. (CR.165-68). The trial court denied both motions on
March 7, 2014. (CR.1070-71). FXCM filed an interlocutory appeal from the
denial of its motion to compel arbitration, and filed a petition for writ of mandamus
from the denial of its motion to dismiss. The court of appeals granted FXCM’s
motion to consolidate these two proceedings.
On December 31, 2014, the court of appeals affirmed the order denying
FXCM’s motion to compel arbitration. (App. C, slip op. at 1, 7). The court held
that the Receiver is not bound to arbitrate the assigned claims because the Investors
were not parties to the Client Agreement containing the arbitration clause. (App.
C, slip op. at 4-5, 7). While the court agreed that receivers generally are bound to
the contractual obligations of their receivership entities, it found that this Receiver
could avoid such obligations simply by asserting claims assigned to him by the
Investors. (App. C, slip op. at 5-6). Applying the same reasoning, the court of
appeals also denied mandamus relief from the order refusing to enforce the forum
selection clause. (See App. C, slip op. 6-7).
-5-
FXCM filed this petition for review based on the arbitration clause in the
Client Agreement. Relatedly, FXCM also filed a petition for writ of mandamus
based on the forum selection clause in the same Agreement. See In re Forex
Capital Markets, LLC, No. 15-0128 (Tex. Feb. 16, 2015).
SUMMARY OF THE ARGUMENT
There is no dispute that the arbitration clause covers the subject matter of the
Receiver’s claims, or that the clause is otherwise valid and enforceable. The only
issue is whether the Receiver is bound to the arbitration clause when he asserts
claims assigned to him by third parties. The answer to that question is “yes.”
First, legal constraints on the Receiver’s authority dictate that the arbitration
clause applies to the Receiver’s claims. Under settled law, a receiver can only
bring assigned claims that belong to, and are property of, his receivership estate—
here, the estate of Revelation, which executed the Client Agreement. Because the
claims are now part of the Receiver’s estate, he is subject to all the same
obligations that applied to Revelation, including the arbitration clause. As the case
law makes clear, the Receiver “stands in the shoes” of his estate.
Second, the arbitration clause applies to the Receiver under general
principles of contract law. An assignee, like the Receiver, remains subject to any
defenses that FXCM could have asserted against him before the assignments
occurred. Here, both the Client Agreement and settled principles of receivership
-6-
law bound the Receiver to the arbitration clause when he was appointed
Revelation’s receiver—before he solicited the assignments of the Investors’
claims. Because the obligation stemming from the arbitration clause pre-dates the
assignments, the Receiver is bound to the clause as a matter of law. This Court
should reverse and direct that all claims be dismissed.
ARGUMENT
I. Whether The Receiver Is Bound To Arbitrate Presents A Question Of
Law That This Court Reviews De Novo.
Because this Agreement involves interstate commerce, it is governed by the
Federal Arbitration Act (“FAA”). See 9 U.S.C. § 1, et seq.; In re L&L Kempwood
Assocs., L.P., 9 S.W.3d 125, 127 (Tex. 1999) (per curiam). The FAA embodies a
strong presumption in favor of arbitration, such that any doubts regarding
arbitrability must be resolved in favor of arbitration. Prudential Secs., Inc. v.
Marshall, 909 S.W.2d 896, 899 (Tex. 1995).
To compel arbitration, a party must satisfy two requirements: (a) the
existence of a valid agreement to arbitrate; and (b) that the claims fall within the
scope of the agreement. See In re D. Wilson Constr. Co., 196 S.W.3d 774, 781
(Tex. 2006) (orig. proceeding). When, as here, the facts relating to the existence of
a valid arbitration agreement are undisputed, this Court’s review is de novo. See
Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 55 n.9 (Tex. 2008) (“The trial court’s
determination of the arbitration agreement’s validity is a legal question subject to
-7-
de novo review.”) (quoting J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227
(Tex. 2003)).
The second requirement, whether the claims are covered by an arbitration
agreement, is undisputed, and, in any event, is not a determination for the Court.
Under the Agreement, disputes regarding arbitrability are for the arbitrators to
resolve. (CR.827); see Petrofac, Inc. v. DynMcDermott Petroleum Operations
Co., 687 F.3d 671, 674-75 (5th Cir. 2012).
II. The Court Of Appeals Erred By Refusing To Enforce The Arbitration
Clause.
In upholding the denial of FXCM’s motion to compel arbitration, the court
of appeals failed to correctly apply the legal principles that constrain the
Receiver’s authority. By accepting the position as a receiver, the only “shoes” the
Receiver may now wear are those of his estate. He cannot bring claims in any
other capacity. And because the estate, through Revelation, is bound to the
arbitration clause, so is the Receiver. Moreover, because the Receiver’s
obligations under the arbitration clause arose before he ever accepted the
assignments, he is also subject to the clause under applicable principles of contract
law. This Court should reverse.
-8-
A. Legal constraints on the Receiver’s authority bind him to the
arbitration clause, regardless of whether he acquired these claims
by assignment.
Because there is no dispute that the Receiver’s claims fall within the scope
of the arbitration clause, the sole issue is whether the Receiver is bound to it. On
that issue, the court of appeals found that the source of the claims was dispositive.
According to the court of appeals, the only defenses that may apply to the
Receiver’s claims are those which FXCM had against the Investors, as assignors.
(App. C, slip. op. at 4-6). But that analysis ignores receivership law, which forbids
the Receiver from asserting claims assigned by third parties unless they first have
become property of his estate. Once those claims became property of the
Receiver’s estate, it did not matter how the estate acquired them; Revelation’s
obligation to arbitrate this suit applied equally to the Receiver.
The Receiver can only represent his receivership estate; he lacks standing to
bring claims on behalf of third parties like the Investors. Texas courts have
acknowledged this principle, consistent with a long line of authority from the
federal courts. See Akin Gump, Strauss, Hauer & Feld, L.L.P. v. E-Court, Inc.,
No. 03-02-00714-CV, 2003 WL 21025030, at *5 (Tex. App.—Austin May 8,
2003, no pet.) (“[A] receiver does not have an unfettered right to represent
creditors and shareholders of a corporation. A receiver may represent creditors and
shareholders only to the extent that the cause of action seeks to preserve or recover
-9-
corporate assets.”); see also Janvey v. Democratic Senatorial Campaign Comm.,
Inc., 712 F.3d 185, 190 (5th Cir. 2013) (“[A] federal equity receiver has standing
to assert only the claims of the entities in receivership, and not the claims of the
entities’ investor-creditors . . . .”). 2
Thus, the only way a receiver can bring third-party claims, such as those of
the Investors, is if those claims have become the property of his estate. See Cotten
v. Republic Nat’l Bank, 395 S.W.2d 930, 931 (Tex. App.—Dallas 1965, writ ref’d
n.r.e.) (a receiver may only bring third-party claims “to the extent that his cause of
action seeks to preserve or recover the assets” of the entity in receivership). This is
also true in the analogous context of bankruptcy, where courts permit trustees to
assert claims assigned by third parties only if those assignors have effectively
“abandon[ed] their claims,” caused the assigned claims to become “property of the
estate,” and “allow[ed] the trustee to seek recovery . . . on behalf of the estate.”
Logan v. JKV Real Estate Servs. (In re Bogdan), 414 F.3d 507, 512-13 (4th Cir.
2005); see also Finova Capital Corp. v. Lawrence, No. 399CV2552-M, 2000 WL
1808276, at *2 (N.D. Tex. Dec. 8, 2000) (same principle). In this case, the
2
See also, e.g., Scholes v. Lehmann, 56 F.3d 750, 753 (7th Cir. 1995) (“Like
a trustee in bankruptcy . . . an equity receiver may sue only to redress injuries to
the entity in receivership . . . .”); Reneker v. Offill, 3:08-CV-1394-D, 2012 WL
2158733, at *5 (N.D. Tex. June 14, 2012) (“‘It is a well-known legal principle that
a receiver can bring only those claims belonging to the entity it represents and
cannot bring claims on behalf of third parties.’”) (quoting Scholes v. Stone,
McGuire & Benjamin, 821 F. Supp. 533, 535 (N.D. Ill. 1993)).
-10-
assignments must—and did—make the Investors’ claims property of the
Receiver’s estate. As a result, the Receiver’s estate has become the real party in
interest, rather than the third-party Investors who assigned the claims. See In re
Bogdan, 414 F.3d at 513.
While the court of appeals acknowledged these limitations on the Receiver’s
authority, it failed to appreciate their ramifications with respect to the Receiver’s
obligations to arbitrate these claims. (See, e.g., App. C, slip op. at 5-6 & n.5).
Thus, the court of appeals erred in finding that the Receiver stood in the shoes of
the Investors. Id. at 4, 6.
The Receiver cannot elect to assert standing based solely on the “investors’
unconditional assignments” and ignore “his capacity as a receiver,” as the court of
appeals believed. (App. C, slip op. at 6). These claims against FXCM now belong
to the Receiver’s estate, and he is prosecuting them as its representative and as the
successor to Revelation. Any recovery from FXCM will become the property of
his estate and will be distributed in accordance with the estate’s guidelines, not
merely to the Investors. (CR.454-55; 2RR.28). Thus, by any measure, Mr.
Crawford is functioning as an equity receiver, not solely as an assignee, in
prosecuting these claims.
The court of appeals erred when it found that ownership of these claims was
“not pertinent to [its] resolution of this appeal.” (App. C, slip op. at 5 n.4). To the
-11-
contrary, the estate’s ownership of these claims is crucial; otherwise, the Receiver
would not have standing to bring them in the first instance. See Reneker v. Offill,
3:08-CV-1394-D, 2012 WL 2158733, at *4-5 (N.D. Tex. June 14, 2012) (to have
standing, a receiver must allege “injury in fact” arising from claims belonging to
his estate).3 Had it fully considered these facts, the court of appeals would have
concluded that the Receiver stood in the shoes of his estate, not in those of the
Investors. As a result, the Receiver is bound to Revelation’s Client Agreement and
the arbitration clause in it. See United States Small Bus. Admin. v. Coqui Capital
Mgmt., LLC, No. 08 Civ. 0978, 2008 WL 4735234, at *2 (S.D.N.Y. Oct. 27, 2008).
The court of appeals also failed to apply the relevant rule in Hayes and Co.
v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 885 F.2d 1149 (3d Cir. 1989).
(App. C, slip op. at 5). In Hays, the court required the bankruptcy trustee to
3
The court of appeals also erred in concluding that the Receiver “does not
concede the claims themselves are receivership property.” (App. C, slip op. at 5
n.4). In fact, the Receiver admitted that these claims belong to his estate.
(2RR.19-20 (admitting these are “claims of the receivership estate” that the
Receiver has standing to assert)); see also SEC Action, Civil Action No. 4:13-cv-
383, Dkt. 74 at 6 (E.D. Tex. Jan. 6, 2014); CFTC Action, Civil Action No. 4:13-cv-
382, Dkt. 70 at 5 (E.D. Tex. Jan. 6, 2014) (characterizing these as “claims held by
the receivership estate”) (capitalization removed). This Court should take judicial
notice of these pleadings on file in the SEC and CFTC Actions, which are included
in Tabs D and E of the Appendix, pursuant to Texas Rule of Evidence 201(d). See
Freedom Commc’ns, Inc. v. Coronado, 372 S.W.3d 621, 623 (Tex. 2012) (per
curiam) (“Under [Rule 201(d)], a court will take judicial notice of another court’s
records if a party provides proof of the records.”) (citing MCI Sales & Serv., Inc. v.
Hinton, 329 S.W.3d 475, 497 n.21 (Tex. 2010)).
-12-
arbitrate all claims that, like those at issue here, were property of his estate. 885
F.2d at 1154. The Hays court found that, in prosecuting such claims, the trustee
was “successor to the debtor’s interest” and thus “‘subject to the same defenses as
could have been asserted by the defendant had the action been instituted by the
debtor.’” Id. (quoting COLLIER ON BANKRUPTCY ¶ 323.02[4]). The only claims
not subject to arbitration were certain “avoidance” claims that belong directly to
the trustee, rather than the debtor, and that the Bankruptcy Code confers express
standing for the trustee to bring. Id.
Under Hays, Revelation is subject to the arbitration because that clause
could have been asserted by FXCM “had the action been instituted by” Revelation.
Id. And unlike the avoidance claims addressed in Hays, the Receiver does not
acquire standing under the Bankruptcy Code, but rather, is asserting these claims
while acting as Revelation’s successor. As a result, the Receiver is subject to the
same arbitration clause that applies to Revelation.
In short, Revelation expressly agreed that its “estate,” “legal
representatives,” and “successors” must arbitrate all suits in connection with its
transactions through FXCM. (CR.825 ¶ 23). Once these assigned claims became
the property of the Receiver’s estate, all defenses against the Receiver apply when
he prosecutes them on the estate’s behalf. Because receivership principles bind the
-13-
Receiver to the arbitration clause, the court of appeals erred by refusing to direct
the dismissal of this case.
B. The Receiver’s obligation to arbitrate these claims predates the
assignments and is thus binding on the Receiver.
The court of appeals’ exclusive focus on the origin of the assigned claims is
also misplaced because the Receiver was already bound to the arbitration clause
before the assignments occurred. Because the Receiver’s obligation to arbitrate
predates the assignments, FXCM is entitled to enforce it against the Receiver.
Basic contract principles dictate that the Receiver, as an assignee, is subject
to any defenses that FXCM could have asserted against him before the assignments
were made. For these principles, this Court need only look to the Restatement
(Second) of Contracts, as it has done in many cases. See, e.g., Seagull Energy
E&P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 347 (Tex. 2006) (adopting
Restatement’s approach regarding the effect of an assignment); Global Drywall
Sys., Inc. v. Coronado Paint Co., 104 S.W.3d 538, 538 n.2 (Tex. 2003) (citing
Restatement’s approach regarding limitations on the right to assign claims).
The Restatement makes clear that assignees are subject to any defenses that
the defendant had against them before the assignments occurred:
An assignee’s right against the obligor is subject to any
defense or claim arising from his conduct or to which he
was subject as a party or a prior assignee because he had
notice.
-14-
RESTATEMENT (SECOND) OF CONTRACTS § 336(4) (1981); cf. CORBIN ON
CONTRACTS § 51.2 (2014) (“A counterclaim, set-off, or recoupment, arising out of
the same transaction as that by which the claim of the assignee was itself created,
is usable [by the defendant] against the assignee in precisely the same cases that it
would be so usable if it were operative as a complete defense.”). Such preexisting
defenses are unaffected by the assignments. Cf. Murphy Oil USA, Inc. v. Wood,
438 F.3d 1008, 1016-17 & n.7 (10th Cir. 2006); State v. Hogg, 535 A.2d 923, 933-
35 (Md. 1988), abrogated on other grounds, Dawkins v. Baltimore City Police
Dep’t, 827 A.2d 115 (Md. 2003).
Under these Restatement principles, the Receiver’s rights against FXCM are
subject to the arbitration clause for two reasons. First, the Client Agreement
obligated the Receiver to arbitrate all disputes against FXCM, well before the
claims were assigned to him:
This Client Agreement . . . shall be binding upon
[Revelation] and/or the estate, executor, trustees,
administrators, legal representatives, successors and
assigns of [Revelation].
(CR.825 ¶ 23 (emphasis added)). There is no question that the Receiver falls
within the scope of this clause as Revelation’s “legal representative” or
“successor” acting on behalf of Revelation’s “estate.” Additionally, there is no
dispute that the subject matter of this suit is covered by the arbitration clause.
Since the Client Agreement contains no exception for claims acquired by
-15-
assignment, those claims were subject to the Client Agreement once they became
part of the Receiver’s estate. As a result, the Receiver’s rights, even as an
assignee, are subject to FXCM’s arbitration-clause defense under the Client
Agreement that Revelation executed well before the Receiver was assigned these
claims. See RESTATEMENT (SECOND) OF CONTRACTS § 336(4).
Second, in addition to the Client Agreement’s express language, the
Receiver also was bound to the arbitration clause because of limitations on his
capacity as receiver. As soon as he accepted that position, the Receiver could only
prosecute claims on behalf of his estate, whether derived from Revelation or by
assignment. See Janvey, 712 F.3d at 190; In re Bogdan, 414 F.3d at 512-13; see
also supra 9-14. Thus, the Receiver immediately succeeded to defenses that apply
to his estate, such as the arbitration clause. 4 See Coqui Capital Mgmt., LLC, 2008
WL 4735234, at *2.
In short, under applicable contract and receivership principles, the Receiver
is bound by the arbitration clause in the Revelation-FXCM Client Agreement.
4
Nor is this principle inconsistent with Oakes v. Lake, 290 U.S. 59, 62-63
(1933), on which the court of appeals mistakenly relied. (App. C, slip op. at 6). In
Oakes, the receiver acquired additional authority by the assignment of claims—just
as the Receiver here has acquired standing to bring the Investors’ claims. Nowhere
does Oakes suggest that an assignment negates any pre-existing defense against the
Receiver. Instead, the common-law contract principles discussed above make
clear that preexisting defenses can be asserted against the Receiver, as assignee.
-16-
This Court should reverse the court of appeals’ judgment and order that this case
be dismissed.
PRAYER
For these reasons, Petitioner Forex Capital Markets, LLC prays that this
Court grant review, reverse the court of appeals’ judgment, and order that this suit
be dismissed, or alternatively, to hold this petition until the related petition for writ
of mandamus on the enforceability of the forum selection clause is resolved.
Respectfully submitted,
BRACEWELL & GIULIANI LLP
By: /s/ Christopher H. Rentzel
Christopher H. Rentzel
Texas Bar No. 16785500
Chris.Rentzel@bgllp.com
Kevin T. Schutte
Texas Bar No. 24033050
Kevin.Schutte@bgllp.com
1445 Ross Avenue, Suite 3800
Dallas, Texas 75202
Telephone: (214) 468-3800
Facsimile: (800) 404-3970
Yvonne Y. Ho
Texas Bar No. 45055673
yvonne.ho@bgllp.com
711 Louisiana Street, Suite 2300
Houston, Texas 77002
Telephone: (713) 223-2300
Facsimile: (800) 404-3970
-17-
OF COUNSEL:
LLOYD KADISH & ASSOCIATES, LTD.
Lloyd A. Kadish
Illinois Bar No. 01378767
LKadish@aol.com
345 North Canal Street, Suite 901
Chicago, Illinois 60606
Telephone: (312) 559-9181
Facsimile: (312) 264-0470
ATTORNEYS FOR PETITIONER
FOREX CAPITAL MARKETS, LLC
-18-
CERTIFICATE OF SERVICE
I certify that a true and correct copy of this Petition for Review was served
on the following counsel of record by the Electronic Filing Service provider on the
17th day of February, 2015, addressed as follows:
J. Mitchell Little
mitch.little@solidcounsel.com
Charlene C. Koonce
charlene.koonce@solidcounsel.com
SCHEEF & STONE, L.L.P.
2601 Network Blvd., Suite 102
Frisco, Texas 75034
Counsel for the Receiver
Robert Coleman
Robert.Coleman@WilsonElser.com
WILSON ELSER MOSKOWITZ EDELMAN & DICKET, LLP
Bank of America Plaza
901 Main Street, Suite 4800
Dallas, Texas 75202
Counsel for Weaver & Tidwell, L.L.P.
Scott Palmer
scott@scottpalmerlaw.com
SCOTT H. PALMER, P.C.
15455 North Dallas Parkway, Suite 540
Addison, Texas 75001
Counsel for Brian Hinman
/s/ Yvonne Y. Ho
Yvonne Y. Ho
-19-
CERTIFICATE OF COMPLIANCE
This petition complies with the length limitations of TEX. R. APP. P. 9.4
because this petition consists of 3,974 words, excluding the parts of the brief
exempted by TEX. R. APP. P. 9.4(i)(l).
/s/ Yvonne Y. Ho
Yvonne Y. Ho
-20-
NO. _________
IN THE
SUPREME COURT OF TEXAS
AUSTIN, TEXAS
FOREX CAPITAL MARKETS, LLC,
Petitioner,
v.
KELLY M. CRAWFORD, RECEIVER,
Respondent.
APPENDIX TO PETITION FOR REVIEW
OF COUNSEL: Christopher H. Rentzel
(Application for admission Texas Bar No. 16785500
pro hac vice forthcoming) Kevin T. Schutte
Texas Bar No. 24033050
Lloyd A. Kadish BRACEWELL & GIULIANI LLP
Illinois Bar No. 01378767 1445 Ross Avenue, Suite 3800
LLOYD KADISH & ASSOCIATES, LTD. Dallas, Texas 75202
345 North Canal Street, Suite 901 Telephone: (214) 468-3800
Chicago, Illinois 60606 Facsimile: (800) 404-3970
Telephone: (312) 559-9181 christopher.rentzel@bgllp.com
Facsimile: (312) 264-0470
lkadish@aol.com Yvonne Y. Ho
Texas Bar No. 45055673
BRACEWELL & GIULIANI LLP
711 Louisiana Street, Suite 2300
Houston, Texas 77002
Telephone: (713) 223-2300
Facsimile: (800) 404-3970
ATTORNEYS FOR PETITIONER FOREX CAPITAL MARKETS, LLC
-21-
APPENDIX
Tab
Client Agreement between Forex Capital Markets, LLC and
Revelation Forex Fund, L.P. (R.821-38) .................................................................. A
Trial Court’s Order denying Forex Capital Markets, LLC’s Motion to
Dismiss for Improper Venue and Lack of Jurisdiction, and in the Alternative,
Motion to Compel Arbitration, signed on March 7, 2014 (R.1070-71) ................... B
Court of Appeal’s Opinion and Judgment, issued on December 31, 2014 .............. C
Status Report,
Sec. & Exch. Comm’n v. White,
Civil Action No. 4:13-cv-0383, Dkt. 74 (E.D. Tex. Jan. 6, 2014) ...................... D
Status Report,
United States Commodity Futures Trading Comm’n v. RFF GP, LLC,
Civil Action No. 4:13-cv-382, Dkt. 70 (E.D. Tex. Jan. 6, 2014) ........................ E
-22-
#4799720.7
Tab A
%FXCm
CLIENT AGREEMENT
© FOREX CAPITAL MARKETS LLC
For Individual Accounts, please complete pages 7-8 & 11-13
For Corporate Accounts, please complete pages 7-8 & 11-15
For Limited Liability Company (LLC) Accounts, please complete pages 7-8, 11-13 & 16-17
For Partnership Accounts, please complete pages 7-8, 11-13 & 18-19
For Trust Accounts, please complete pages 7-8, 11-13 & 20
For ALL Managed Accounts, please additionally complete page 21
Along with a copy of identification & proof of address
And return to:
Forex Capital Markets
Financial Square
32 Old Slip, 1Oth Floor
New York, NY 10005
United States
Fax: (212) 897-7669
18
821
currency transactions. fQ(eX Capital Markets, LLC neilller offers !he nght to offse~ nor guarantees
FXCM RISK DISCLOSURE STATEMENT a market In v.tllcll to offsa~ transactions it effecl1 as a counterparty. Therefore, it may be diffioult cr
This brief SIStement does nol disclose all ollha risks and other slgnlficant aspects of spol [Q(elgn lmpossiblalo liquidate an exisUng position, to assess its value, to detecmlne a fa~ prlce or to assess
currency tradi119 ('For&x'). In light of U,o risks, you snou!d undenal.mency because or price limits or "cl~lt brealey may nol.axisl Jhe absence of an underlying reference price may make il difficult to. judge that Trader Is obligated to immediately meal such margln requirements. Failure to meal
''fa fro~' va\ue. requirernGrlto may resutt in lhe llquidaUon or any open pos!Uons with a resultant loss. FXCM also
reserves lhe righlto relusEt to eecepl any crder 0( guarantee e market In whloh to offset.
6. Depotlled cash and properly .
You should famlllarite you,.,all wilh lho prot&elions eC<;O!ded money or olher ptOperty you deposit 5. OTCFX buslnass Is not traded on en organized exchange and therefore does not require open·
(Q( oomestlc end foreign trensaeUons, pl!llkularly In the oven! of a fum Insolvency or bankruptcy. oU\cry. !:ven lhOugb quotations or pr\oes are afforded by many computer-based component
lhe extent to which you may recover your money or propeny may be governed by opecific systems, U,e quotations and prieas may vary duelo marlt do not obtain aeeess
your lransacllons have been alfeclad. You should ask lha film w!lll Whi<:h you deal for details about to the trarlln9 faciliUa$. Tha Trader will be noble lo FXCM lor trades axec:uled by means of lhe
the lypes of reckess available In bo!h your home jurisdiction and other relevant jtni$diclions before Treda(s password even if sud! use may be\'lrongrut.
you stsrtlo trade.
d) Ouollng and Exee<.JUon Errors:
e. Currency risks Should q$ where there Is a neehero the ctoentls buying or setnng diredly from the market malrms. FXCM
reserves tho right to lnve•Ugate and review any account FXCM suspects of manipulation end 6. Client under.t:ends that Refen1ng Broker and many third party vendors of trading systems.
withhold funds •uspected of 1>41ng dorived from such activity. FXCM reserves the right to make the courses, programs, research or recommendatlonsarenotregulatedby a government agency.
nec.essary corrections or adjustmants on the acoount Involved. Aooounls thai are suspected a!
manlpulaUon may at FXCM's so!e disees the right to transfer aocounls from one option to the other at any lima. Traders on bolh 9. FXCM doe• not endor$6 or vouch for Ute services provided by the Referring Broker. Since
DO and NOD ax&eution may experienca w'.dened spreads and slippage under ~ain market Referring Brol dalermine a lair price or to 1. AUTHORIZATION TO TRADE.. FXCM fs authorized to putcllasa end sell OTCFX !Of Trade(s
assess the exposure to ~sk. For !he .. rea601ls, those ltansll(;Uons may ln\IOive Increased risks. ai:<:ounl(s) \>lllh a eounler party bank or oopllistlcated lnsUtuUons or partroipanto In ai:<:ordance with
Off-exchange lrllnsacliQns may be le$$ regulated or subject to a oeparate regulalory regime. Trader's otal or written or computer instructions. Unless lnslrueted by Treder to the conlrery In
Be!Ofe you undertake such trsnssclions, you ohould familiarize yourself with opplicsblt> rules and writing, FXCM is authorized 1o &i.lledgo of the
(Trading Agent), whalher on e discteUonary or non-discretiol'l'lry basis, FXCM Shall In no way be leek or eulhorily of any sucll parson ('Authorized Per&ons'). Trader •!l'ees \hal such Authorized
responsible fDf reviewing Trader's choice of such Trading Agent or for r'!'laklng any Persons are authOriZed on Us behalf lo fumlsh FXCM aU data, lnlormation, Instruction$ and
recommendaltons with respect thereto. FXCM makes no representaUO(Is or warrenUes ooneerning authorizations required by FXCM to perform lis services under this Client Agreement.
any Trading Agent F)(CM shell not be responsible for any Joss to T111der occasioned by the action$
of the Trading Agent; and F)(CM does no~ by lmphcaUon or otherwise andoroe or approve of lite Treder authorizes FXCM to rely and act upon any Instruction, ;ulhorilation, data or information,
oper;~llng melhods ofille Trading AgenL If Trader gives the Trading Agent author1\y to exercise
which appear lo be given by en AuthoriZed Parson to FXCM by any means, Including inslrueUons
any of ils rights over It aCCOU'll, Trader does so at his own ris!t transmilted by atectronlc means or otherv.ise, end lho production of a facsimhe Qf a document
purporting to bear \he aulhor\zaUon of Treder, Trader lher01fore agrees that (i) FXCtll Is authorized
B. FXCM does ~ol ronl~!ar ease; and (ftl) Trader will bear Uta risk of all unauthorized lnslrUctions, by any of iiS
rlsltaUves, employees, Of agents, and Where FXCM has acted In pood faiiiJ and without
lnlormallon or advice regarding FO(OX trading, FXCM shall in no way be responsible 101 any loss lo negligence, Trader willlndamnily FXCM against and save FXCM harmlesa from ~II losses, cosio,
Trader rasultlng from Trader's usa of such lnlormstlon or advice. Trader understands that Rsferrlng leas, damages, expenoas, claims, suits, demands and liabilities whatsoever that FXCM mey suffer
Brolcer end many third part~ vendors of trading systems, courses. programs, resoarch or or ln<>~r 011hal may be brooght agaiMI FXCM, In anyway relating to or arising ou!ol FXCM acting
reeommendallons may or may not be regulated by a governrnent agency. upon, delayl"i In acting upon or refusing to acl upon any Instruction or lnlormaUon. provided to
FXCM by Treder, lnctuding Improper, unauthorized or fraudulent lnstruetrons given by eny of
REFERRAL DISCLOSURE Trader's employees, ag~nto ortepresenlaUves, even if such instructions were not In fact made \11th
Trader's authon'ty.
FXCM AND REFERRING BROKER ARE WHOlLY SEPARATE AND INDEPENDENT FROM ONE
ANOTHER. THE CLIENT AGREEMENT BETWEEN FXCM AND REFERRING BROKER DOES :Z. GOVERNMENTAL, COUNTERPARlY INSTITUTION AND INTERBANKING SYSTEM RULES.
NOT ESTABLISH A JOII'ff VEtmJRE OR PARTNERSHIP AND REFERRING BROI. and T.ader shall not tlmebybe given any Independent legal « contraclu~l rights with respect to
sucll requirements.
3. Clientael4. II Referring Broker or any oilier third party provkles cnenl witi:llnlormatlon or advice regarding lime, at F)(CM:s sole distteUon, based upon aCCXIunt ~za, volume traded, end market condilions.
Fore~ trading, FXCM shall In no way be responsible for any loss to Client resulllng from Client's use Such margin requirements may be greater or las$ than margins required by a counterparty bank.
of such lnlorrnatlon 0( advice. FXCM may change margin Jequ!remenls at any time. Trader agrees to deposit by Immediate wire
transfer such addiUonal mBl9ln when and as required by FXCM and will promptly meal all margin
5. To the extent Client )'las previously been led to beli~ve or belleveslhet utilizing any third per1y calls In such mode oltrenomlsslon as FXCM In .Jis ao!e discteUon designates. FXCM may el any
tra~lng syotem, course, prog111m, rasearch or rec«nmendations provided by Referrlng Broker or time proceeo to liqul~ata Tredete account In accordance wilh paragraph 7 be!ow and any failure by·
2
Forex Capital Markets - Trading Agreement
11APR2011
20
823
FXCM Ia enforce Hs rig~l• hereunder shall no\ be deemed a waiver by FXCM Ia enforce Its rights accepted by FXCM Jn Its sole disO'etion lo offset the Spot currency posiUon. Treder, by noo.n of\ha
there•"•'· No previous margin requirement by FXCM shai preclude FXCM Tram lnc:Jeasing lhat buoiness day before the settlement date ollha Spot correney pos"lon, oha!l provide FXCM v.\lh
requirement without prior noUoe. FXCM retainslhe rig~tto limit the amounlendlor total number or a~ptob!e re-delivery or offsal instructions. lrl the absence of lime!y and adequate loslr\lctlons
open positions that Treder may acqulJe or maintain at FXCM. FXCM v.1H aUernpt to executa all !rom Treder, FXCM Is authorized, at FXCM'• ebsoMe discretion, lo rollover lhe Currency positions
orders, v.lllcllll may, In lis so! a dlsaelion, clloose to accept in accordanoo wilh the oral. wrilten, or In the OTCFX acrount[o) lor T! sel-off far liobiliUe.oJTreder to
4. PRIVACY POliCY. FXCM respecls each lndiY!duaTs Jlght to privacy. We value our relatronohlp FXCM whather or not FXCM ha• made advanoes In oon®Jon \lith such funds, aurenclas or olhel
with roo. and we take pride in mainlaining loyalty and respect with each Individual client by property, and lrrospeeUV& ollhe number of eccounts Trader may have \loith FXCM. FXCM may In Its
providing you \lith security. The provision$ ol lhls notice epply to former Clients as well as cu.- di5Ciation,. at any t!ma and from lima to tlrne. wilhoul nolioe to Tneder, apply and/or \Iansler any or
current Cli911ls. all funds, osrencles or other properly ol Trsdet between any of Trade(s IICCOUlls. Treder hereby
also grants to FXCM 11le rlghl to pledge, re-pledge, hypothecate, lnvosl or loon, either separately or
a. Porsonat Information. Wnen you apply lor or mainta:n a live ai;COUtll \loith FXCM, wa eallect with tho property of other TradQfs, to llsell u broker or to others, any n<:urities or other property of
pe~onel lnlonnallon about ~ou lor business purposes, sueh as evaluating yoor financial needs, TradO( held by FXCM s1 mergi~ or security. FXCM shall el no Ume be required I<> deiver to Trader
prooossfng your requeslo end llansacUons, informing you about products end senl.aes tllat may be lila Identical property delivered to 01 purcllased by FXCM Cor any aocount or Treder. The purpose
of Interest to You. and providing customer seNice. Such Information may lndode: Application of lho Landi~ Agreamonlls to allow FXCM l<> use the currencies, property, depo$llory reoalpls as
Information • Information you provide to us on applications and ather rooms, sucll as your name, collateral.
addrS$S, birth date, &OOial security. number, ooc:opaUon, ossets. and Income. T11111sacUon
lnfonmal!on - lnlormalion about your transaelions \lith us and with· our affiliates as wall as 7. LIQUIDATION OF ACCOUNTS. In the event of (a) the death or Judicial declarellon of
Information about our oarnmunlcalions with you (ExempleG Include your a~nl balances, ltadlng Incompetence of Trader, (b) lhe ~ling of a petition In banlwplcy, or a petition for tho oppolnlmenl of
aeUvlly, y<>ur Inquiries and our responses).· Verification lnl'orma\lon - Information necessary to verify a raoalvar, or the Institutlon ol any Insolvency or stmnar proceeding by or against Tradar; (c) tho
your Identity sueh as a passport or driVe(s license (Exsmpios also Include bacl<9r<>Und Information filing ol an ellachment agslnsteny o!Trade~s accounts carried by FXCM, (d) lnsufficlenl margin, or
about you we receive !rom public reoords or !ram other entitles not affiliated -Mill FXCM). Tho USA FXCM's dotarminaUon that any collaleial deposited to protect one or more accounts of Trader Is
Patriot Act requires uSioco!lect Information and toke aeUons necessary to verify your Identity. Inadequate, regardlau of cutrenl market quotations, to secure the eeooun~ (a) Tredefs fa~..-e to
provida FXCM any Information requested purouant to this CUen\ Agreement or (~ any other
b. About Coo~les. Coold.. are small files CQntaining Information thai a Web site uses to track Its Clrcums\a~ or developments lhel FXCM deems eppropriate for llll protection. and In FXCM's
visitors. FXCM may sol an~ access FXCM cooldes on your computer, enabling us to learn vmlch oolo diocreUon, it niay lake one or molher notice To
o. Security Technology. FXCM ~ses S$Cilre Soekal Layer (SS\.) anerypUon leel\nology In order to Trader, Trad~s personal represenla\ivos, heirs, exeeulors, edmlnlolta!ors, tru•lees, legatees or
protect cetlain Information lhot you oubmll. This type ol leclvJology protects y011 from having yoot anigns and regardl~s of whether the owner.~hlp interest sholt be solely Tradefs or held jointly with
lnf«mallon Intercepted by anyone other than FXCM while Ills being ltensmUted to us. We work others. In liquidation of Trede(s long or short positions, FXCM mey, In Hs 601• disaallon, ollsolln
hard to onsUie that our webs~es era soeure and that they moat lndUsltY standards. Wo atso USB the same selllemen\ or !I may fnHiala new long or short pasiUons In order lo establish e ~pread or
oUher "afeguatds such as firowells, authentication systems (a.g., passwords and personal Oll'&ddle whk:h ln FXCM'a sole judgment maybe advisable to protect or reduce ax!slifl9 ~siUOMin
]denll!ication numbeiS) end access contr~ maelhanlsms to control unaulholized access lo oyotems Trade(s aocount. Ally sales or jl\Xchaseo hereunder may be made eccord'mg to FXCM s)udgrnent
end data. and at i\$ disccotion with any Interbank or other exChange market where such busine$$ Is then
usually transacted oral a public aueUon or private .are, and FXCM may purchase the '1410lo or any
d. Sharing Information with Gur Alliliatet. We may snare personal intormallon dasetlb~ above with pari !hereof lree from any right of redompUon. Trader will not be wsponslb!e lor debit balances
our affiliates for busine$5 purposes, sueh as, but not limited to, serviCing Client aeeQU11e and dtrecUy resu!Ung !ram lta!llng aeUvity.
lnf«mlng Clients about now products and services, or to aid In tho trading activity or lhe oornpany,
Its affillatas, or employees, and as permiHed by applicable law. Our affiiiales may Include 8. SETILEMENT DATE OFFSET INSTRUCTIONS. FXCM In lis sola and absolute direetron m~
companies controlled or owneUOI or facilitate charoes, order cance!laUon cllmges, aeeQU11 lransler charg&s or other ~argos), fees jlneluding,
your ll'ensaooons with FXCM, Including lhOso that prOY!do professional, legal, or aoc:oun~ng advice without nmilaUon, leas imposed by any interbank agency, bank. oontract marke\s 01 other regulatory
lo FXCM. Non-affiliated eornpanlea lhal assi$1 FXCM In providing services to you ere requifed to or self-regulatory organizations) arising out of FXCM providing •ervices hereundei. II T1ader uses
maintain tile wnftdenUality of such inlormafloo to the e)llentthey ret$ive It end to use your personal FXCM's "Active Trader" platform, Trader consent• to pay a commission charge at a rata of n~
tnfoonallon only In the course of providing ouch services and orly for the pusas that FXCM {$50) USD per million base c:urreney ltadad, per side. FXCM may chango Its commission, charges,
dictates. Additionally, In order Ia wmply willllhe Cornmodty Futures Trading Commis&lon ('CFTC') ancffor Ieos without ~lee. Trader agrees \a be fiable to FXCM for Interest on amounts duo from
regulations, FXCM Is obligated to regularty lransmll copies of all aocount sla\aments of &rtf Client Trader lo FXCM alan Interest rate equal to three {3) percentage points ebo'll' the Ilion prevaHing
who Is a related peraon of a Retail Forox Counterparly, as defined In Sa ol the Ralail F; Counlorparty, and any tela~va Of FXCM In !he event Trader Instruct• FXCM to lransler open posmons, moneys, and/or properly or
spouse ol any Of \he [orego!ng persons, or any relative O[ suc!J spouse, v.ilo shmes \he same llama Tlade(s acx:oont to another lnsfituUon. If there arellQ foiled ord"' In your account for at least one
n any of !he foregoing persons. Furthermore. we may also disclose yout personal Information to {1) year, you W.~ be subject to a dormant a<:countadm!nlsVatl\18 reo (lho '"Fee'), Th• Fee win be
third parties to rutfill your Instructions or pursuant to your expre•s oonoenl We want you lo know equal Ia lha Iasser of $50 or the remaining balance In your aooounL Yo~ will be subject \o lha Fee
that FXCM Will not oeH your personal information on a yearly basi• \hereafter~ the condillon• olaled above..., mel. If you are esse•sed \he Fee
end your accounlbalance becomes zero (0), your eC, we may disclose personal Information to cooperate with regulatory eulhoiiUas and few of aOIXlUntS for Trader shall be deemed correct end shall be conclusive and binding upon Tradei H
enforcement agencies to comply -Mill subpoenas or other official requ&Sio, end as neoessary to nol objected to Immediately upon reoelpl and confirmed In wr!Ung within (1) day after lransmtttal Ia
protect our rights or property. Except as descciOod In lhls privacy policy, we will not use your Trader by posUng on tho Interne~ or othervrise. Margin calls shall bE> <:Onc:iuslve and blriding unless
personal Information for any olhar purpa50 unless we deserioa how auch information Will be uoed al objected to Immediately In v.1iUng. In lieu of sending trade confirmation via paola! mail, FXCM witt
lha Ume you disclose lito us. or we obloln your permission. provide Treder lnlemal access to view his eocount at any lime \loith an online login. Wrillen
objections on Tradef's part ohall be direoled to FXCM ellis ~orne office located at the rrn>S! '""I
g. Opt Oul You are not requirelved by a ldas as FXCM &hall deem approprialo lo verify Information regarding Trader. Trader lurlher
lrens~on: (e) any profit or loss arising as a resu1\ of a nuctualio!l In lha exchange rate affecting aUihorixes FXCM to Investigate Tradefs current and past Investment activity, and In connecllon
such ourrenoy will be en\ll"ly for Trade~& aocount and rtfk; {b) a!llnl\ial and sub5equent deposna therewith, to contact sucll futures eommlsslon merOsas shall be made fn U.S. dollare, in $UCh amounts as FXCM may In Its sole compliance data center• as FXCM shall deem appropriale. Upon fopriole only for hOlders are Jointly aoo 5everally nabie to FXCM for any and all obligatio~ arising out of transacllons
persons who esn assume risk of loss In Oll any tax, liability, penally, or loss under any present or future laws or olherwise. The
asle\e(s) of any of the Cliant.s 'Nho shall have died shall belleble, eoo tho eurvivor{e) shall oonlinua
15. TRADING RECOMMENDATIONS. (a) Trader ael the $Ub}ecl cl market
reoommendallons lumlshad to Trader, and lhatthe mallie! position or FXCM or any tud1 officer, (d) If this ac:<:ount I• held by the parlies as )Oint tenants with rights of &urvlvorohlj>, then, upon
director, affiliate, assoc!ole, stoefnary or non-discteVonory basis, FXCM shall In 21. NO WAIVER. No provision of this Client Agreement may be waived unless tho waiver is In
" way be responsible for reviewinll Trade(& choice of &ud1 Trading Agenl nor making any writing and signed by both Trader and an authorized officer of FXCM. No waiver ollhls CHen\
recommendations with re~t thereto. Trader under$\ands that FXCM makes no warJanlles nor Agreement may be Implied from any course of dealino between the parties or from any laill.rfesentaUons eonceming lhe Trading Agan~ that FXCM shall not be responsible lor any lou to FXCM or its agonls to ess&rl its rtghts under this Client Agreement on any cxx:aslon or serias of
Trader occaslooed by lhe actions of \lle Trading Agent end Uhal FXCM do&s no~ by fmplicai!M or oo::aslons.
otherwise, endorse or epprove of !he operating methOds of the Trading AgenL lf Trader gi>'es
Trading Agent aulhority to exercise eny of il.s rights over Tradefs accounl(s), Trader underotands 22. GOVERNING LAW AND JURISDICTION. This Client Agreement. and tho rlghls aoo
that Trader does so at Trader's own rl•lr. obllgaUorts of th~> parties hereto, shall be {IOVemed by, eonstrued and enforced In all respects by
the laws or lho Slate of New York, where FXCM"s principal order exe¢uUon facifiUes are located,
16. TRADER REPRESENTATIONS AND WARRANTIES. Trader tej>fosents PAd warrants that (a) and mthOul regard to laws that would otherwise apply under applicable dlolce of law principles.
Trader Is of sound mloo, legal ego aoo legal competence; and. {b) No persoo other than Trader has
or \\ill have an Interest In Traders .sOoount(s); and, (c) Trader hereby warrants that regardless of 23. BINDING EFFECT. This cnent Aweernenl shall 1>0 conUnuo11s and shall cover, tooMdualty
any subsequent detarmfnaUon to the contrary, Trader Is suitable to trod"a OTCFJ<; and (d) Trader is and collectively, an ecoounls or Trader at any Ume opened or reopened with FXCM irr~&petlive Of
not now en employee of any eMchenge, any corporation In wbld1 any exchange owns a ma]orily or any dlange or dlanges sl any Ume in lhe personnel of FXCM or i\$ •~•~. assigns, or
the capital stock. any member o! any exdtange and/or firm reglslered on any ox of torminalion, or at any lima whatsoever by FXCM upon the tr;onsmlttaf of written 'lQtloa or
Trader's current financl.el condition. The Tmder represents and warrants that in determining the lenmfna\ion to Trader, provided, that such lerminalion shall nol affect eny tmnsactiom previously
Treder's Nat Worth, A5•ets end Liabilities ware carefully ealeuletad then Uabllitias were subtracted entered Into end sbail not relieve eilher party of any obligations set out in this Client 1\greernenl nor
from Assets to determine the value that the Trader ha• inciuded In lhe r•nan<:iaf lnformauon aa Not shall illelieve Trader of any obligations arising out of any deftclt balance.
Worth. The Trader rePfesenls and warrants lhet In determining lhe value of Assets, the Trader
lnciu~d cash and/or cash equiv01anls, u.s. Government end Marirovislona of lhls Client Agreement ~nd. any other agreements between FXCM end Trader.
18. NO GUARANTEES. Treder acknowledges lhdlons: Sy•tem malfunclion, $quiprnenlfeilure (whether
made by anyone ooncerning Trad~s aooounl that differ from any statements Trader receives from Trader's or FXCM's equipment), system Interruption or system vnavaOability; (d) Delay: Delays,
FXCM must be brought to \he eltenUon of FXCM"s Complianee Olliw lmmedilllely In writing. fa~ure 01 errors In lmplemonUng any lnslrucllon; and {e) Information: lnaOC\Kate or Incomplete
Trader understends thai Troder must authorize every transacllon priOI to Its exe¢ion unless tnstrucUons received by FXCM from Trader_ 1\dditionally, Trader agrees to Indemnify and hold
Trad~r has delegated discretion to another party by signing FXCM"s limited pow"! or attorney FXCM. Us am!lales, employees, agents, success<>rs. ar\d essfgns harmless from and against
(LPOA), and any disptrted lransactions must be brought to the allenUon of FXCM"s Compliance ell liabilities, losses, damages, oosls aoo 8'1'9nsu, Jnelud!ng •Uorn&ys leas resulting from use of
4
Forex Capital Markets- Trading Agreement
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p~ogrammable lrad!ng systems, whether bulit by Trader himself or by any third party and executed ltlsth&cllent's respon~ibllily to find aut aU necessary lntormallon aboula Trading Agent prior
on or u$ing the FXCM Tras and olher properly Of Trader as specified In Paragreptl S ot lila Trader
32 Old Slip, 10"' Floor, New York. NY 10005 USA; the tenm 'Tradet shall mean the party (or Agreement. .
patlios) ex~ng the CUent Agreemen~ and the term 'Client Agreement' silall lnc:lllitratlon (as provided for In the $«se letms end conditions lor any modifications and agrees to be bound by EMAIL ACKNOWLEDGMENT ·
same, Trader may not amend lhls Client Agreement unless such amendment Is In wrillng and
signed by bo\11 Trader end an aulhorl•ed ollioer or FXCM. No oral agreements or lnslruelions to the Client ael is a cllangeln
con!lary &hall be rewgnld&Jstands that.FXCM Is Qn!y proviunts will havalradas exetuted via FXCM accounts and tracflng lines. Client II Client does not ~sh to have acoount lnlonnalion delivered electronically as dosccibed In
All clienlaca>Unts will hav1> margin requirement• established by lhe fXCM deaRng desK. this Policy, Client must canted FXCM via e-mail at Cllfllplianee@fxcm.com or send e request to:
Tt1a au10111ated FXCM trading eystem will distribute profits and losses accordingly lo all client FOI8X Capital Markets LLC Attention: Compliance, Fioanc!al Square. 32 Old Slip, 10th Floor, New
aooounts. York. NY 10005. Please bs advised thai once FXCM receives such lnslruction FXCM will not be
FXCM may o$leblish ru1es and provisions lor client eocounts, Including but not limited to able to servlee Client's aet:OURtan~ will dose any open and funded acrounls lltal Client has.
minimum aCCCJunl $I~.,, investment time period, c:ommlulons end lncenlive lees, or any other
financlalarrangemenls. ARBITRATION AGREEMeNT
Ills the client's responsibility lo find out all necessary informaUon about FXCM and ensure
that all atl'angements ere discussed and dearly understoOd pc1or to eny lra~ing aclivily.
5
Forax Capital Marllels- Trading Agreement
11APR2011
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BY AGREEING TO THIS ARBITRATION PROViSION, TRADER MAY BE WAIVING CERTAIN keep yOIX pas•WOld(s) and ather coofldenUallnformaUon secret and ensure thatlhlrd partles do not
RIGHTS, INCLUDING THE RIGHT TO A JURY TRIAL. TRADER NEED NOT AGREE TO THIS obtain aecess to your account or your portable devica, You Will be oolely liable ror any end all
ARBITRATION PROVISION IN ORDER TO OPEN AN ACCOUNT WITH FXCM. tredeo executed by means of your pauword(al even II such uoa may be wrongful. FXCM may rely
on s!l ordeiS and lnstrucUons submitted using your password(s) witho\JI. furlher Inquiry ot
Tt~det agrees end, by opening one or more accounts for Trader, FXCM also agrees, lhat any end verification.
ell dlopu\es, conllov.ersioa, ot claims arising out of this Ctient Agreement, or the relaUonshlps ot
activities eontempleled lhereoy, Including \V!lather or not any sud\ dispute, cooiiOversy, or claim I• 3. You agree the! nellher FXCM nor Its third pstly servtea ptovlderswill belloble for the re~obllily or
arbitrable, shall be resolved by an ArbilreUoo Panel oeiecled by the National futures AssodaUon accureey of the information· made available via Mobile TS II. Such Information ts reasonably
('NFA'), pursuanl to tho NFA's Code of Arbilretlon. The award ollhe NFA Arbilretors, or of lh8 believed to be accurate end Umely; however, there are no explloll or lmpilal wananlies of aocuraey
majOrity of them, &hall be final, end judgment upon the award may be entered In any court ol or timeliness In connection lherewilh ot eonllnoed a~eilability of this Information, and such
competent jurisdietlon. lnlormat1011 ahould not be relied upon as ouch.
FXCM MT4 POWERED BY BOSTON TECHNOLOGIES LETTER OF 4. You agree that es betmen FXCM Trading Slaiion and Mobile TS II, the FXCM Trading Stellonls
tha primary means relied upon for ell order and trade related nNiea• Including bul nollimlled to
DIRECTION cooflrmetrons, account balances, margin balenoes, price quotes, account oletus, end e.c:oounl
details. In the event or any lnoonslsteneles between FXCM Trading StaUon and Mobile TS 11,
The fallov.ing addiUonal terms apply to clients utitizlng FXCM MT4 Pawered By Boston FXCM Trading S!ation $hall govern.
Technologies ('The Program'~ If cnent utlli~• The Progrem, Clilll1t agrees to the eddi~onallerms
and au~s FXCM to ecteceordingly by signing this CUentAgreement. 5. You agre&lllal you will not rely on the Mobile TS II as your primary moans or pladng trades. You
agru that the Mobile TS n Is being provided solely as a convenience end nol as en alto maUve to
1. Client wishes to utilize The Progl'em to axeCIJte trades end to direct trade ordere end hde details FXCM Trading Slation or lelephotllng tho FXCM trading desk.
to FXCM. Clienl$ utiHzlng Tho Program will not be eo~ ltades ot~r$ and tradt details di1eelly
with F){CM, but relh$1' will be Oi!Uity Is to use commereialty reasonable ef(ortsto enter
orders pursua nIto lhe lrede orders and trade del ells generated by The Program snd as recity Yle Mobile TS II and FXCM Shall not
Progrem will be provided by The Program provider end not by FXCM. be respooslble for eny lossas or missed opportuniUes Incurred by you due to lh8 delayed or non·
delivery of any order or lnslruc:tlon 'lis Mobile TS II.
(c) If more than one FXCM dient Is using the same system or service as The Program, Client
ac;lulov.1ecfgas that FXCM may enter block orders to enheflCII order "ewllon, In v.tllch case a fa!r (b) You agree that FXCM shall not be responolble lor any fees associated with your use of Mobil&
end systematic fill allocation method will be employed. Client understands and •cknowlediJ•s lhat TS II should you Incur eny fees from your Internet service provider, phone •ervtce provider, or any
FXCM v.l~ onlY be responsible for using Its commercially reasonable efforts to exeeute, In a Umely other •ervtc:e provider used to access Mobile TS 11.
fashion, the llada ordet> and trade details generated by The Prooram. FXCM &hall not be
responsible for any error or maffunctioo of The Program, mechanical or communication line lailura, {c) Online trading and trading via portable device, no mattar how convenient or effiaen~ do not
system errors, data feilure ot any other eeus~ beyond its conllol. CliGfll acknowledges til;! I F){CM reduce lhe rtsl<• essodeled with foreign exchange trading. FXCM Will no! be liable to you or eny
can accept and execute orders ooty If actually received or generated end then on a •not he1d' basis tllird party for tile accuracy or timeline" or any end. elllnformaUon provided Ilia Mobile TS fl or for
(I.e. FXCM ollall not be held rospoo•lble for tho execullon of !he order ot the plica indicated or any and all actions on such Information.
Otherwise).
IF YOU HAVE MlY DOUBTS AS TO WHETHER AN ORDER PLACED VIA MOBILE TS II HAS
{d) Client has had the opportunity to ask questions on now Client'• aooount will be handled and BEEN EXECUTED, YOU SHOULD NOT PLACE ADDITIONAl ORDERS VIA MOBILE TS II;
aclOt1$lble for the petformanee of The P1ogram or lrading losses In Client's eccoul\l. EXPf;RIENCING TECHNICAL PROBLEMS.
{e) FXCM may acl upon lh8 authority given by this letter of direction unlit Client revokes the
authority by 'M'illen notice addressed end edually delivered to FXCM, In accordanco with tile BASIC Disclosure
Instructions end details on FXCM's v;ebsllo. FXCM may also terminate the eu!horizetlon over The
Program at any time lor any re..on In Its sole discretion end will provlda Client wilh written notice. The National Fu\uret Assoelallon keeps records or ell format proceeding• against Future.
Client shell be responsible for .any open lots In Client's eocounl at the lima Tho Program Is Commission Merchants. The lnformaUon of ihele proceedings een be found at
terminated. Client &hall pa1mit FXCM to execute olfsalllng orders for any open tots In Client's bllo·lfww nfa fu!ures orglbaslcoel(
a~nl at the time the letter of direction Is terminated.
{I) Clitll11 agrees that, In the absetJce or wll~ul or wanton misconduct, neither FXCM nor any of its
officer•. directors, employees, CQO$ultants, agents or amnales wiff be lleld liable for any act c)r
omission In the cour&e of or In CQMeetion with Client'a partlelpstion In The ProgOriance a delay In
pr1oe quoleUon or an lnabllily lo trade caused by oelworlt ctrcuil trsnsmlss!on problems that may
arise between you and any Internet service pro"lider, phone sel\'iee provider, or any other service
provider or related to any olher problemt outside the direol control of FXCM.
2. FXCM will end6avor lo u•e oornmerclelly reosoneble elforb to enouretha seeunty of Information
and ~ansacUons conducted via Mobile TS IL However, you aru obligated and solely responsib!e to
Forex C11pltal Markets- Trading Agreement
11APR2011
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827
RISK DISCLOSURE STATEMENT
OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS INVOLVE THE LEVERAGED TRADING OF CONTRACTS
DENOMINATED IN FOREIGN CURRENCY CONDUCTED WITH A FUTURES COMMISSION MERCHANT OR A RETAIL
-FOREIGN EXCHANGE DEALER AS YOUR COUNTERPARTY.
BECAUSE OF THE LEVERAGE AND THE OTHER RISKS DISCLOSED HERE, YOU CAN RAPIDLY LOSE ALL OF THE
FUNDS YOU DEPOSIT FOR SUCH TRADING AND YOU MAY LOSE MORE THAN YOU DEPOSIT.
YOU SHOULD BE AWARE OF AND CAREFULLY CONSIDER THE FOLLOWING POINTS BEFORE DETERMINING
WHETHER SUCH TRADING IS APPROPRIATE FOR YOU.
(1) TRADING IS NOT ON A REGULATED MARKET OR EXCHANGE- YOUR DEALER IS YOUR TRADING PARTNER
WHICH IS A DIRECT CONFLICT OF INTEREST. BEFORE YOU ENGAGE IN ANY RETAIL FOREIGN EXCHANGE
TRADING, YOU SHOULD CONFIRM THE REGISTRATION STATUS OF YOUR COUNTERPARTY.
The off-exchange foreign currency trading you are entering into is not conducted on an interbank market, nor is it
conducted on a futures exchange subject to regulation as a designated contract market by the Commodity Futures Trading
Commission. The foreign currency trades you transact are trades with the futures commission merchant or retail foreign
exchange dealer as your counterparty. WHEN YOU SELL, THE DEALER IS THE BUYER. WHEN YOU BUY, THE
DEALER .IS THE SELLER. As a result, when you lose money trading, your dealer is making money on such ·
trades, In addition to any fees, commissions, or spreads the dealer may charge.
{2) AN ELECTRONIC TRADING PLATFORM FOR RETAIL FOREIGN CURRENCY TRANSACTIONS IS NOT AN
EXCHANGE. IT IS AN ELECTRONIC CONNECTION FOR ACCESSING YOUR DEALER. THE TERMS OF
AVAILABILITY OF SUCH A PLATFORM ARE GOVERNED ONLY BY YOUR CONTRACT WITH YOUR DEALER.
Any trading platform that you may use to enter off-exchange foreign currency transactibns is only connected to your futures
commission merchant or retaH foreign exchange dealer. You are accessing that trading platform only to transact with your
dealer. You are not trading with any other entities or customers of the dealer by accessing such platform. The availability
and operation of any such platform, including the consequences of the unavailability of the trading platform for any reason,
is governed only by the terms of your account agreement with the dealer.
(3) YOUR DEPOSITS WITH THE DEALER HAVE NO REGULATORY PROTECTIONS.
All of your rights associated with your retail forex trading, including the manner and denomination of any payments made to
you, are governed by the contract terms established in your account agreement with the futures commission merchant or
retaJI foreign exchange dealer. Funds deposited by you with a futures commission merchant or retail foreign exchange
dealer for trading off-exchange foreign currency transactions are not subject to the customer funds protections provided to
customers trading on a contract market that is designated by the Commodity futures Trading Commission. Your dealer
may commingle your funds with its own operating funds or use them for other purposes. In the event your dealer becomes
bankrupt, any funds the dealer is holding for you in addition to any amounts owed to you resulting from trading, whether or
notany assets are maintained in sep;=1rate deposit accounts by the dealer, may be treated as an unsecured creditor's claim.
(4) YOU ARE LIMITED TO YOUR DEALER TO OFFSET OR LIQUIDATE ANY TRADING POSITIONS SINCE THE
TRANSACTIONS ARE NOT MADE ON AN EXCHANGE OR MARKET, AND YOUR DEALE:R MAY SET ITS OWN
PRICES.
Your ability to close your transactions or offset positions is limited to what your dealer will offer to you, as there is no other
market for these transactions. Your dealer may offer any prices it wishes, and it may offer prices derived from outside
sources or not in its discretion. Your dealer may establish its prices by offering spreads from third party prices, but it is
under no obligation to do so or to continue todo so. Your dealer may offer different prices to different customers at any
point in time on its own terms. The terms of your account agreement alone govern the obligations your dealer has to you to
offer prices and offer offset or Jlquldaltng transactions In your account and make any payments to you: The prices offered
by your dealer mayor may not reflect prices available elsewhere at any exchange, interbank, or other market for foreign
currency.
7
Forex Capital Markets- Trading Agreement
11APR2011
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828
(5) PAID SOLICITORS MAY HAVE UNDISCLOSED CONFLICTS
The futures commission merchant or retail foreign exchange dealer may compensate Introducing brQkers for introducing
your account in ways which are not disclosed to you. Such paid solicitors are not required to have, and may not have, any
special expertise in trading, and may have conflicts of interest based on the method by which they are compensated.
Solicitors working on behalf of futures commission merchants and retail foreign exchange dealers are ·required to register.
You should confirm that they are, In fact registered. You should thoroughly .investigate the mann~r in which all such
solicitors are compensated and be very cautious In granting any person or entity authority to trade on your behalf. You
should always consider obtaining dated written confirmation of any Information you are relying on from your dealer or a
solicitor In making any trading or account decisions.
FINALLY, YOU SHOULD THOROUGHLY INVESTIGATE ANY STATEMENTS BY ANY DEALERS OR SALES
REPRESENTATIVES WHICH MINIMIZE THE IMPORTANCE OF, OR CONTRADICT, ANY OF THE TERMS OF THIS
RISK DISCLOSURE. SUCH STATEMENTS MAY INDICATE POTENTIAL SALES FRAUD. .
THIS BRIEF STATEMENT CANNOT, OF COURSE, DISCLOSE ALL THE RISKS AND OTHER ASP~CTS OF TRADING
OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS WITH A FUTURES COMMISSION MERCHANT OR RETAIL
FOREIGN EXCHANGE DEALER. ,
I hereby acknowledge that I have received and understood this risk disclosure statement.
8
Forex Capllal Markets- Trading Agrcemnnt
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PROFITABILITY ANALYSIS
i ::::x;?\'i;·;. ,\:,, . L::>::;·yt;;;ni·::'.\;\::·. Q2 2010 Q3 2010 Q4 2010 Q1 2011
% Profitable 23% 23% 23% 27%
% Unprofitable 77%. 77% 77% 73%
Total Accounts 17,771 15,023 18,362 20,223
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
Over 180,000 tradeable accounts trade through trading platforms offered by FXCM Holdings LLC and its consoHdated subsidiaries Forex
Capital Markets LLC, Forex Capital Markets Limited, FXCM Asia Limited, FXCM Australia Limited, ODL Securities Limited, and ODL
Securities K.K. Japan.
9
Forex Capital Markets- Tradll1g Agreement
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NO DEALING DESK DISCLOSURE
THE FOREIGN CURRENCY TRADING YOU ARE ENTERING INTO IS NOT CONDUCTED ON AN EXCHANGE.
FXCM IS ACTING AS A COUNTERPARTY IN THESE TRANSACTIONS AND, THEREFORE, ACTS AS THE BUYER
WHEN YOU SELL AND THE SELLER WHEN YOU BUY. THE PRICES FXCM OFFERS MIGHT NOT BE THE BEST
PRICES AVAILABLE AND FXCM MAY OFFER DIFFERENT PRICES TO DIFFERENT CLIENTS.
ALTHO.UGH FXCM IS THE COUNTERPARTY TO EACH OF YOUR TRADES, IF YOUR ACCOUNT(S) IS TO BE
TRADED UNDER A "NO DEALING DESK" MODEL FXCM LIMITS RISK TO ITSELF BY IMMEDIATELY HEDGING
(OFFSETIJNG) THE TRADES AND POSITIONS IT ENTERS INTO WITH YOU 1-FOR-1 WITH ONE OF SEVERAL
BANK MARKET MAKERS. AS A RESULT, FXCM DOES NOT PROFIT WHEN YOU LOSE MONEY ON A TRADE.
RATHER, FXCM IS COMPENSATED BY MARKING UP THE PRICE IT RECEIVES FROM THE BANK MARKET
MAKER.
IN SOME CIRCUMSTANCES FXCM MAY ELECT TO REMOVE YOU FROM "NO DEALING DESK" MODEL. FXCM
WILL NOTIFY YOU AT THE TIME THAT IT DOES SO. IN SUCH A SITUATION, YOU SHOULD BE AWARE THAT
FXCM MAY MAKE MORE MONEY IF THE MARKET GOES AGAINST YOU. ADDITIONALLY, SINCE FXCM ACTS AS
THE BUYER OR SELLER IN THE TRANSACTION, YOU SHOULD CAREFULLY EVALUATE ANY TRADE
RECOMMENDATIONS YOU RECEIVE FROM ANY OF FXCM'S REFERRING BROKERS. FXCM ITSELF DOES NOT
PROVIDE INDIVIDUALIZED CLIENT TRADE RECOMMENDATIONS.
10
Fore:x Capital Markets -Trading Agreement
11APR2011
28
831
FXCM Forox capilnl Markots, LLC
Ffnoncl~t Squaro
%FXC:m IILild•l
NYSE~
32 Old Slip 10th Floor
New Vorl<. NY 1000S USA
Tel. 212 897 7660
Fax. 2. f 2 8977869
E-mail; 'C~dmln@fxcm.com
www.f~cm.com
lhelnfonnalion below must be ct~mpleted In FULL.
. .
. ACCOUNT A~PLICATION .. . · _
Aa:c!ll'll R.@oklr.IUon rpJe.asac:hE:ckOf'l'3'onlyl:
Qlnd"....ldoal~ Ostotlda:d FulllCAcroont 0EOR0GaP{Juso(],pyQQro{]c.a.o·
QJo!nl Ao:x>-=..2::::5:::0904=2::..__ _ _ _---'
last (Sur) Namo: Firol (Given)Namo: t.foddl;>ll"~· L~sl {s..} ......~; FiJsl (Gr,.,.} Hwo: t.,bddloName;
White Kevin Geoffrey
I'
I Gend¥, 0Malo OremaiO Gen-~r. 0Malo Or....,.
f.lathats""'' 0s:ngio Ot.IOII""' Ma.taiSIGtus: Os;,:qe 0Maqted
I
l
l
j
i
I 5 Pr;mory Aceounl Holdet's Uomo Addre .. (PIUs&all>e~ proof of r••ldenQt1ono.
'
!
7 Primary Aco:<>U!\1 Hoklt~o Emplo;ment Oel;>Rs l:jEmpb-JO\.:mp!oold bQ samo B$ ~ ""'(s)opp<>oritlg on 11\l>l\ppklali>n),
20333535 Revelation Forex Fund, LP i
SWFf Cod• 01 ABA Nu-'nb« p.,_, IO COtl!&ol at Bri
111102758 Dawn Atencio
FINANCIAL INfORMATION iForJI)InlAccounl, please use combined financl~i lnlonnatlon; For Corporate t,ccounts, please usol`` ccP,pany's finorciol inlormal\on)
1. 'Moo\ i> )'OUt total estmote$1inll"l>~
0Uodor s2s.ooo D $25,ooo-$.:9,m 0 $50,QI)O.S(I!),m I. Am~.bere!Otl)'oomm~ty`` · DYes 0110
r:J$100.000-$249,~ D $250,000-$1,000,000 0 0\'tt SI.9QO,OOO KYes, Ploas&Ust: _ _ _ _ _ _- - - ; - - - - - - - - ·
{If ywr snntt3l h::cirlels ,.,.than S25.000, p:oase te-iiowtllo 'High Risk
lnvHlmenl Nullce· on Page 5.1 2. N1 Assoda!edpmon (AP) will> artJ olr\erCFrC orii~Aregislerod
ffm? DYe• g]llo
2. Net \\Orth (ossels m.-....·lf;)bs;t;es)1
0 Under S2S.OOO D S25,000-$49,WI 0 $50,000-$99,999 HYfs, r"aselist----------7------~
Ostoo,ooo-s2<9,m D ~250,0»-st,ooo,ooo Ost,ooo,ooo-Js,ooo,ooo
[]ss.oo::t.ooo-sto.ooo,ooo IZ!O.er$10.000,000
(If- noI ..~ losolist - - - - - - - - - - 7 - - - - - - - ·
lloUce' on Pogo 5.)
Q. Am)'DU al~·o-uf -or do j'OO sharettle ~!illl~ey,itJl -8J\OirJCt.."1,
3. ll!V-<1 a•s~ ("'sot< thai ~o bo ~ cotti~G:IIo co $h)? dired.ot,..,pb;"or"'-nofFXCI.I~ DYes IZJNo
DUM« s2s,ooo DS2$,0»-$49,wa D
$SO,ooo-s(l!).~m
0$100,000-$249,999 0 S2$0,QI)O.St,OOO,OOO 0 0\'0r $1,000,000 1. !I yes, please dejcrib_-;,------~
OY•• 9. AI• you agor..ret ~·. o!rr.er, o·Houd""cdb«-ol-ropeey"''holooiiOyoor>? 0r-.'o 1M «PPY lr.tere•L o$sodate P"'QI'l or e"'pb;-ea cf fEiolf rot••
co\fietpOrty7
IIYos, Y.••seltld'.a;tedale o1 eli$~ ondpio> 11>3 OMlO ~'"ilh a ~al palloet,
)Ill d ~ i!q\lit)·ln!ece.,_
5. \WI ooy pel$0<'l o!Mr !Mil Trade< -Ito!, mansgo, ordi"ea k1 !his assodote r-oW>nsh:p'----'-------~
6. Do you h-:.10 or h>vo ;-cu eve< had My oll>er &:«><>nl(•J wilh FXCM? Plenso noto thot If you onswert:o requ!ftn
11APR2.011
30
833
TRADING-EXPERIENCE , ' - - _: . · ,, '' _. .. . · _ .- ; .
1. Do ycu t.avo expelf`` ``~ ~ities.?' I!IY•s Years?~
2. llo)'«ll>av~e~bed<1gcxmnc Years.?~
3. Do you ..,_..,. e-lt•?...zL
4. Ooj<>Uh>,...e>f*~ Uad:ngwrlllfldoUiuougll inleltlanl! 0< 01Cforoigtloxd-ave tl(rJ Pli<>t llWI'lg ••J>Orionce, ~lo..<> rei.e-.. thG 'Jflgh RioI< lnvoo tmont NoUce' on Pao• 5.
SIGNATURE . , . - ·. .
PLEASE ACKNOWLEDGE YOUftAGREEUENT AND UIIOERSTANOING OF EACH OFTflESE SPECIFICDISCLOSUiiESOF TIIECUEHT AGREEUENT BY CHECI(IIlG TilE
APPROPRIATE BOX NExT TO EACH DISCLOSURE TITLE. P:<109!!11f~ll:n!!.Q~W'~!lil§li!l~t~1l«ll PgS liequi'ed 0 0
9. J..uoJ!oriLalim I<> Tnms:fer F!.!lds PgS ROQUiW 0 0
fO.Consen1to.~l'r``mis.t;!on.dCr:dr.n3W.!l~tttJu"l``~ P~li R~qul'eO llOl SIGN Ulml YOU IIA.V!< REI\0 ALL OF niE fOIIEGOtllG CAREFIILLY.
1ecJ.nornontls a I-ery term Wid CUJfilele,. eo:epted ~y FXCM nWTilaVQ rcccl-.w o lul,.l!'f IICQ)lll( docun;,-.15 aro ••emll>n$ 0< de~ lo lh!s agoe• a g - Wtion d cl\a~ nOl t-o blr'IQ C<1 FXCM end~ Ori!I®IIOQ!\$ :!han gq"m Tr'*-'< --.1 rID. .
2. A PHOTOCOPY OF PROOF OF ADDRESS (I.e., A COPY OF UTILITY Bil-L OR BANK STATEMENT NO MORE THA~ 6 MONTHS OLD)
Upon processing of the account application. you will !xi contacWd via E·mall. .. '
Pleas& ensure the application Is complete and legible to av.old errors or delays In pco:t;:ess!ng;
FXCM does not charge applieanls orclienls for completing ils applications or forms.
Important warning regarding fraudulent use of FXCM's website and trading platform. . , ,
Any person who, ~nowingly and with Intent to defraUd FXCM or ils affiliates, submits an accounl application or other Information containing any
materially false Information or conceals, for the purpose of misleading, lnfomtatlon concerning any related fact material, corpmits a fraudulent acl,
which is a crime which may subjecl such person to criminal prosecution and lhe Imposition of cfimlnal and civil penahles. j
If you intentionally provide us wllh any false ot misleading lnfom1alion and we suspect fraud, we wiU commuoicale the f13cls surrouoding your
1;ommuolcatioo to us to all relevant national. stale and local law enforcemenl authorities. ·
13
fore~ Capital Markets -Acco~nl /1-ppllcath>n
11APR2011
31
834
FXCM Forex Capital Markets, LLC
ZFxcm
Flnan~i<'l Square
32 Old SUp 10th Floor
'
I
··~ii4•1 New Yo1k, NY 10005 USA
Tel. 212 897 7660
I NYSE. Fax. 212 897 7669
E·mau: admln@fxcm.com
~·ww.(ltcm.com
I ~ ~ - -- , -- -
.
- - - -· - ---- --- -
~ ' - - .-
· PARTNERSHIP RESOLUTION • ; :
-
.
-- ----
'
- - '
l
I
•. .:.R.:.F.:.F___:G.:.P...:'..:L:..:L.:.C'-----~aGoneraiP~M<-rci Revelallon Forex Fund, LP_ • .,-NJ>I'cmledU'lde_S_ta_t_e_...,--_or
:::T::ce=x::a:-:s=====(llwl'Pottne"'Np'). dotooreb'JOOpled in ac=d:!liU Voi'.tl tile proced•...,. ••1 locth in ll»gcuom;,g
r.strumero ollho f'<; con.'ticl \\i'll&rr(o! lh9 provisOO. ol tl>o iP-"*'11 inS1run>e<11> o1
lho~. .
I Partllmhip 11..,., Revelation Forex Fund, lP
2400 Dallas Parkway Suile 540 c.ty_P_Ia_n_o_ _ _ __
l
A or* rona11Ciallnst;lullon7' Ye$ 0 NoD
I "Tho leon fimltlO:i31111sL1""' ~pp&es 10 bulls not Jm~iHI lo a .,...... uedilO< lhrifllno>l opor.~lar, mtrual lund, a I~ soroc!er ct moooy «any ott-...- porsot1 ..t>O engages .. a buono
F.,.,.,iallt\Sl~.r.lon at.oinci.>des lnifovlduolt ..maro ong~ In~ orpoo5ng luld$ort 1ho loehahldllets. j
RESOLUTION :
I (I)R~>Orn ot$UO'..h OII>Go' pa e»>.or~ency
I« 1h'4 Par1no;olip ll'loogo., Md · FXCM, M .aid r..n lo now oonotiluL9 ""'"' to d-> any ol
1ho Pertn.,ship;
(b) To t:cureooy ~-M~iono lorpSig'noroehe&aKiocludOQ t" power!<> seU·stm·;
'To ~M~ d tho P2Jln!osh'p 01'1 &rrf r.>;;t\nwU. t>"'f W(lh transodions end en ai1IO:st«< bY fXCM fonnowe 1a 1mo B$
"'"'9" or equr1 I« 11>o Pettnelohip's ~ !
(h) To se:l'G, c:ornJlloml"'· «fpof gCi& relo,..os on bel >all' ollllls Patn~•lt'p wolh •e!lpecllo 8lY1 '1>11 eij doins. ~·$ ood conro!2<5ies:
I ~) To O:herA;soJ*Ifotm allletm$0nd pr<>vi>ionso!lllo~lmementloreo boot iolereol of !he P.,..,...ship t<>ha>'O ~· aco f'Ofdlos<>an1 r"' fXCio\to
I nrrar>Qe for tho e\:OOI'JOO cl l<>rno \'on!c1t21G noloxea.o!etllp o•ectly, :
(3) Re:solve thai FXCM may ~al"'ilh"'t and lll1o!lh<>por.<>n5 ~d"edl)oorind~ec~yl.rJlhs 10/~lo1hey Vie/r>efoa&lgw)..h tro<> P~ dirOg• 10 FXCM In 'lll'it"o ~II» maoner te .,.rOOtlsU>or•ldOtf;o<«<;
:
(41 Furtller Re...,\-od, lhslln ocd.,lolr>:lu!l>e~ oflho Part11eroh",lhe 6XO!Wioo and doit."'Y cl MAox>unl ``IY.lo\ Cl(m~ Le~er; Cger>l ~r~o FXC!.I to a:! as A!)-'eS af\'h!cl\ lla~ been pr~-..1 to !his meeli"Q l!!li YOtl be ,filedv.111l lhe "'cords olll>o
p~"•hi>) by "Y Q!f"' o1 1M PatlnorV aulnO deliver lha ~malo FltC!.I;
(~I Fl.ll\her Resoh~. UUtlhs rorego!r>J ,....,u- "'"'tho cetl;roeare aelua!ly l\lrriShol PaM«shlp pwsu•l>llhe<&l9 ;nd lhay hero~>·«i, !hot ll>o Petfneroh'p "'7~• lo ndernnify 1>11<1 hold harml~ss FXCM 200 h e!.S(>Oa~ ~om any Md eU loss, damaQO or f~tit.l)' ncuo:r.a ~so af ony of lila
tepfeWtlalioo:S Of'" w~ic-s madd ebo-.-n sl'\-ltl not b9 b'l.fV end cooed.« My of th~ EC.roecments. @ntered Into beN/een tbo Patlnelship end FXCM s.'ha'J not tla\."9 ~ tLJ.~ por1ormed by lho
Partlle'lliJY.
'
Forex Capital Marl11
32
835
(1') fl.. .rther Reso.'\'1!-::1, thot lhEI ebcrJa-nomo3 reprc'$-OO(iili'.-es b9 200 hereby er(! 9Uthoiized Md 01rected lo pte.l!iienl a c:ert~l!!d eopy of tJ;eso ro!f<>I>'J given 1o11>0 AgO'l~l SoJCn litljo &s FXCIA recer;oo ~>T'41en
ooll>=alion !hal StJdl pot.ans are 1>0 IOr.ge< :sucholffCefslsh>lrc;<;<>linoo In M '"'"''"effect ("'••p>di<•
noli:e of re....ocelb'l or tnodifieatioo is gr.-en ilwii!.ing: to FXCM « lt w,x.a.ssort; or MsV,s.
ol"toett-.er enyci lh P"'1norshlpl...-.til
·
I further cerlil~ tftall~oloregolog resolullons ~ ..... nolllean ..-Jod or rescinded and aro now In l"lllotce end ~ffeclond tllat tho Pertner~lllp loa• lllo j>owor under its QO'iOo oponl"9 ol lito abovHel!!leo'!OOd o«oor• for CS.n~ FXCM mus1 have o personal (luanlfieoltl ori'i. For \his ""'"''
tho ""'"~Qned OQI<;>enSO$, v.-11;:1, rn«f becoo;o re<»vffllbto b'/ FXCM from Clienl i
This guaran!eo $118! rema\oJ ill full fon:c and efltd U'llillho 1-n.lion ol tho Ci<-nl Agteem!!fll, prooMeed sha!l nol b.> re~ ..j !!'~llor!O tho 8Cs -k.th FXCM ta•ts. !
Tll1s Guan;ncy ohall bo ljO>I!IIRd OO<\Otruod In ~nee 1\ilh Ill• !a.,. ollh9 Slato ol Hew Vorl; and GrarEIIlo< herobf e>fo or on
fodo!al and ow to axs1s located In .,.,.,YUill COUOMnsl trus Guar'.nly, em taniOnl$ 11>01 Girl proooss 0( Mtioo o1 mol ion"'
oUle< appr~ lollll)' of ••;ct<:oto1s or to snyjodgo lherool mll}l bO w-.'Odv.itlmot l'itllco llf re~tered"' c:ertliOd mal ill by~! Ul'om.
;
lNsGuarcnty onaamrel<>lh9t:>eoa•et' pa~y .,..llhoU\ tho l"'o< v.r;tJen «men! t p'ided that
ony sl>'!> ~s!grn\~edas ollhe _ _ day ol _ _ _ 20_.
SSflumbe<'.
Foe PartnErship Acoounls ONLY:
In aMitiOnto ``~ C6enl Agreement to be completed by the General Partner, please be sure tosubmll the following:
(II PartQershlp A~1eemer11 (lrllmnoo paltnerelilp, subrnR copy of Limited Pilllnershlp Agreement and CertifiCate of Limited Parlflership)
(2) lden6ficalion for all Signlr.;J Parlflers (i.e., copy of passpOrt or driver's license.); and ' .
(3) Proof of address lor lhe signing members (i.e., a copy of an updated Ulifrty bill 01' bank slatemenl no more !han si>c monlhs o!~)
Forex Capllal ~.\arkcls- Partnership Resolullon 19
11APR2011
33
836
ZFxcm
Financi~l Institution Questionnaire . ,. ·
In an effort to better understand your business model and to assist FXCM in making the
required customer screening process smoother, we ask that you complete the following
questionnaire regarding your company's business structure. Should you have questions
regarding any of the content below, please contact cmnp!iance@fX.cm.com and we
will be
happy to assist you further. Thank you in advance for your cooperation.
1. Please provide a general description of your compatly's business model, incldding the
targeted customer base (e.g., investment fim1s, individuals, etc.) and the products/seryices that
your institution offers. '
Revelation Forex Fund, LP (the Company) is a highly specialized hedge fund ~hat
utilizes a statistical arbitrage strategy to capture short and medium term variances
between global exchange rates while remaining market neutral. Our target ·
customers Include accredited individual investors and institutions.
2. Will deposited funds held with FXCM be proprietary funds of the institution or wijl any
portion ofthe funds oliginate from third parties (i.e., investors, members, and/or shareholders)?
Please outline the origin ofthe funds which will be traded at FXCM.
Investor funds will be deposited into the Company's bank account then the Company
will place those funds into the FXCM account. '
3. Wltere does the institution maintain physical offices?
2400 Dallas Parkway Suite 540
Plano, Texas 75093
4. Please provide an understanding of your institution's ownership structure (public v~.
private); a listing ofall owners with 25% or greater interest, and the management struc~ure
including the physical location ofthe managers.
The Company is wholly owned by RFF GP, LLC which is managed and wholly:owned
by Kevin G. White.
F01`` Cnpilnllllarl;cts -l'inanciallostitution Q11CSliom•1ir.:>
34
837
t-1• L'VV•l I.UV V\..l"tHlJf.UI-) '·"'"'l.V ... Q \.V V.I.. U.t.IJ '-'-"r'-'"-'l- ~1&\.# l)\.•pv• t.J..Jr&.VII VJ. U. .t.UV.Il\JU,U.J l-'-'0'-•IU."'"J V'-J.._..J VI
any other govei.nment authorily? (Examples include the central bank, jurisdictional regulators
and any other indepcntlent associations.)
No
6. Please confinn if your company clears for other institutions allowing other institut~ons to
conduct business and provide services to their clients through your institution without the
expense of a physical presence?
No, we do not.
. I
7. If the institution has a designated Compliance and Anti Money laundering officer tl1at is
not completing this questionnaire, please provide the name and contact infom1ation bc~ow.
!
CompanyName: Revelation Forex Fund, LP
l
Name: Kevin G. White ';
'
Title: Managing Principal of RFF GP, LLC the General Partner !
;::71:
i
Si"'"'"'
Date: 7/6/2011
E-mail Address: kwh ite@kgwcapital.com
!'ore~ Capitnl Mark~ls -- Flnancbllnstilution Qucstionnai310 S.W.3d 880, 883 (Tex. 2010) (mandamus relief is available to enforce an
unambiguous forum-selection clause); TEX. CIV. PRAC. & REM. CODE ANN. §§ 51.016,
171.098(a)(1) (West 2011) (authorizing interlocutory appeals from denial of motion to compel
arbitration). In both proceedings, FXCM asserts the trial court erred in not enforcing provisions
of a contract entered into between it and a limited partnership against the federal equity receiver
of that partnership. For the following reasons, we affirm the trial court’s order and deny the
petition for writ of mandamus.
Kevin G. White induced investors to contribute millions of dollars in funds to invest in
Revelation Forex Fund, LP (Revelation) to engage in foreign currency exchange (“Forex”)
trading. To conduct that trading, Revelation opened a “Forex” account with FXCM. When it did
so, Revelation agreed to provisions in a “Client Agreement,” which included a forum selection
clause consenting to jurisdiction and exclusive venue in New York and an agreement to arbitrate.
White subsequently misappropriated over $1 million in partnership funds. The investors also
suffered significant losses from Revelation’s trading activities.
The Security and Exchange Commission (SEC) and the Commodity Futures Trading
Commission (CFTC) instituted civil enforcement actions in federal court against White,
Revelation, and other entities White controlled alleging White defrauded Revelation’s investors. 1
The federal court appointed appellee Kelly M. Crawford as receiver over the “estates and assets”
of White, Revelation, and related entities. The federal court gave Crawford broad powers,
including all powers, authority and rights that the officers, directors and partners had possessed,
as well as all powers and authority of a receiver at equity. The federal court also directed
Crawford to investigate the business affairs of the entities and, after obtaining leave of court, to
file such actions as he deemed appropriate.
Crawford subsequently determined that Revelation’s investors had claims against FXCM
for its participation and complicity in White’s scheme. The investors unconditionally assigned
their claims against FXCM to Crawford and agreed that any recovery would be included in the
“Receivership Estate.” The federal court then expressly authorized Crawford to file suit against
FXCM on the assigned claims.
1
White pleaded guilty to committing wire fraud in connection with the fraudulent scheme.
–2–
Crawford then filed this suit, in his own name, but as the assignee of the investors’
claims. 2 FXCM filed a motion to dismiss for improper venue or, in the alternative, motion to
compel arbitration. It relied on the forum selection clause and arbitration agreement in
Revelation’s Client Agreement. The trial court denied FXCM’s motions.
According to FXCM, the trial court erred in doing so because, as Revelation’s receiver,
Crawford is bound by its agreements regarding venue and arbitration. Crawford, on the other
hand, responds Revelation’s agreements are inapplicable because he has sued only on claims that
the investors assigned to him for injuries they suffered as a result of FXCM’s conduct.
It is well settled that when a claim is assigned, the assignee “steps into the shoes of the
assignor and is considered under the law to have suffered the same injury as the assignors and
have the same ability to pursue the claims.” Sw. Bell Tel. Co. v. Mktg. on Hold Inc., 308 S.W.3d
909, 916 (Tex. 2010). An assignee may thus assert those rights that the assignor could assert,
including bringing suit. Flagstar Bank, FSB v. Walker, 05-13-00724-CV, 2014 WL 6065713
(Tex. App.—Dallas Nov. 14, 2014, no pet. h.); Cadle Co. v. Estate of Weaver, 897 S.W.2d 814,
818 (Tex. App.—Dallas 1994, writ denied); see also Jackson v. Thweatt, 883 S.W.2d 171, 174
(Tex. 1994). An assignee’s rights are also subject to defenses existing at the time of the
assignment that would have been available against the assignor had there been no assignment.
See Irrigation Ass’n v. First Nat’l Bank of Frisco, 773 S.W.2d 346, 348 (Tex. App.—Dallas
1989, writ denied).
Absent an agreement to the contrary, a plaintiff generally has the right to have their
claims resolved by litigation and to choose the venue in which to file suit. See In re Fisher, 433
S.W.3d 523, 533 (Tex. 2014) (plaintiff is generally afforded the right to choose venue when suit
2
Throughout, we use the phrase “investors’” claims to reference claims asserting the legal rights of the investors, not to identify the party
with title or ownership of the claims.
–3–
is filed); Freis v. Canales, 877 S.W.2d 283, 284 (Tex. 1994) (party who has not agreed to
arbitration has a right to have disputes resolved by litigation). A party seeking to enforce a
forum selection clause or an arbitration agreement must first show the existence of the agreement
and that the claims fall within the scope of that agreement. See In re D. Wilson Constr. Co., 196
S.W.3d 774, 781 (Tex.2006) (orig. proceeding); Seven Hills Commercial, LLC v. Mirabal
Custom Homes, Inc., 442 S.W.3d 706, 715 (Tex. App.—Dallas 2014, pet. filed); Young v. Valt.X
Holdings, Inc., 336 S.W.3d 258, 262 (Tex. App. —Austin 2010, pet. dism’d ).
This initial burden includes showing the contract applies to the parties involved in the
dispute. See VSR Fin. Servs., Inc. v. McLendon, 409 S.W.3d 817, 827 (Tex. App.— Dallas 2013,
no pet.). A party may meet this burden by showing the party signed the contract or is otherwise
bound to the contract under principals of contract law and agency. See In re Kellogg, Brown &
Root Inc., 166 S.W.3d 732, 738 (Tex. 2005); CNOOC SE Asia Ltd. v. Paladin Resources
(SUNDA) Ltd., 222 S.W.3d 889, 894-95 (Tex. App.—Dallas 2007, pet. denied); Mohamed v.
Auto Nation USA Corp., 89 S.W.3d 830, 835-36 (Tex. App.—Houston [1st Dist.] 2002, no pet.).
Here, Crawford filed suit against FXCM on claims the investors’ unconditionally
assigned to him. FXCM does not challenge the validity of the assignments. As a consequence,
Crawford stands in the investors shoes. But to support its motion, FXCM did not show the
investors agreed to either venue in New York or to arbitration. Nor did FXCM show the
investors were otherwise bound under any theory of agency or contract law. 3 Instead, it asserts
Crawford was bound by Revelation’s agreements because the investors’ claims are now
“property of the receivership estate” and Crawford, as receiver, “represents” the “estate” and is
3
In its reply brief, FXCM asserts for the first time the investors were bound by the provisions in the Client Agreement. It relies on
two agreements it asserts shows the investors authorized Revelation to execute the Client Agreement. But because FXCM raised this issue for
the first time in its reply brief, we cannot consider it as grounds for reversal. Cebcor Serv. Corp. v. Landscape Design & Const., Inc., 270
S.W.3d 328, 334 (Tex. App.—Dallas 2008, no pet.) (party may not raise an issue for the first time in reply brief). Moreover, the only agreements
FXCM directs us to are copies of a limited partnership agreement and a subscription agreement Revelation attached to its “Public Offering
Memorandum.” Neither agreement is signed by any investor. Further, FXCM has cited us to no authority and has provided no legal analysis
showing these agreements are sufficient to bind the investors to the provisions in the Client Agreement. Huey v. Huey, 200 S.W.3d 851, 854
(Tex. App.—Dallas 2006, no pet.) (failure to cite applicable authority or provide substantive analysis waives an issue on appeal).
–4–
thus bound by any agreements of the “estate.” Of course, the “estate” did not execute the
agreement FXCM relies on, only Revelation did. 4 Nevertheless, FXCM asserts Crawford is
bound by the agreement because of the limitations on a receiver’s standing to bring claims to
benefit investors.
As a general rule, a receiver may sue only for claims of the entities in receivership, and
may not assert claims for injuries directly suffered by the investors. See Liberte Capital Grp.,
LLC v. Capwill, 248 F. App'x 650, 655 (6th Cir. 2007); Scholes v. Schroeder, 744 F. Supp. 1419,
1421 (N.D.Ill.1990); see also Cotton v. Republic Nat’l Bank of Dallas, 395 S.W.2d 930, 941
(Tex. Civ. App.—Dallas 1965, writ ref’d n.r.e.); Janvey v. Democratic Senatorial Campaign
Comm., Inc., 712 F.3d 185, 190 (5th Cir. 2013); Javitch v. First Union Secs., Inc. 315 F.3d 619,
625 (6th Cir. 2003); Jones v. Wells Fargo Bank, N.A., 666 F.3d 955, 966 (5th. Cir. 2012). These
third-party claims are personal to the investor, and they alone may bring them. See Cotton, 395
S.W.2d at 941.
When a receiver sues for the entity’s claims, the receiver generally stands in the shoes of
that entity, possessing no greater rights than the entity had and subject to any agreements the
entity entered. 5 Javitch, 315 F.3d at 625; cf. Hays & Co. v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 885 F.2d 1149, 1153-54 (3d Cir.1989) (when bankruptcy trustee asserts claims
derivative of debtor’s rights, he is subject to debtor’s agreement to arbitrate). A receiver is
4
Crawford agrees that any recovery he might obtain on the claims would become property of the estate, but he does not concede the claims
themselves are receivership property. That issue is not pertinent to our resolution of this appeal.
We also note that a receiver is an officer of the court, not a representative of the parties. See Sec. Trust Co. of Austin v. Lipscomb County,
142 Tex. 572, 584, 180 S.W.2d 151, 158 (1944). “He is a disinterested party, the representative and protector of the interests of all persons,
including creditors, shareholders and others, in the property in receivership.” Id. (citing Clark on Receivers, 2d Ed., Vol. 1, pp. 33-37, ss 34-38,
p. 43, s 45; 45 Am.Jur. pp. 106-111, ss 126-130.)
5
Even so, when a receiver brings claims of a receivership entity, he does not necessarily stand in the entity’s shoes for all purposes.
F.D.I.C. v. O'Melveny & Myers, 61 F.3d 17, 19 (9th Cir. 1995) (while receiver generally occupies the same position as the entity he represents,
certain defenses based on the entity’s unclean hands or inequitable conduct do not generally apply against the entity’s receiver); see also Scholes,
56 F.3d at 753–55 (the defense of in pari delicto does not apply to receiver even if it would apply to entity); Jones, 666 F.3d at 966.
–5–
therefore bound to a receivership entity’s agreement to arbitrate if the entity would have been
subject to that agreement. 6 See Javitch, 315 F.3d at 627.
Here, however, Crawford is not asserting standing based on his capacity as receiver, but
on the investors’ unconditional assignments. Cf. Oakes v. Lake, 290 U.S. 59, 62-63 (1933)
(holding limitations generally applicable to a foreign receiver’s authority to bring claims outside
his jurisdiction do not apply when receiver brings claims based on assignments). FXCM does
not challenge the validity of the assignments or indeed contest that Crawford had standing to
bring the claims. Vt. Agency of Nat. Resources & U.S. ex rel. Stevens, 529 U.S. 765, 773 (2000)
(“an assignee of a claim has standing to assert the injury in fact suffered by the assignor”); see
also in re Bogdan, 414 F.3d 507, 512 (4th Cir. 2005) (unconditional assignments gave
bankruptcy trustee standing to prosecute creditors’ claims). Indeed, if Crawford lacked standing,
FXCM’s remedy would not be enforcement of Revelation’s contract against him, but dismissal
of the claims for want of jurisdiction. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61
(1992).
Finally, we cannot agree with FXCM to the extent it suggest that the capacity in which
Crawford brought the assigned claims dictates the rights and remedies applicable to those claims.
Instead, under well-settled principals that govern assignments, Crawford acquired all the rights
the investors’ had, including the right to bring this suit in Texas state court.
6
However, the receiver is not necessarily bound to such agreements when brining claims of other parties. See Javitch, 315 F.3d at 627 n. 7.
–6–
Therefore, we affirm the trial court’s order denying FXCM’s motion to compel
arbitration and deny its petition for writ of mandamus.
/Michael J. O'Neill/
MICHAEL J. O'NEILL
JUSTICE
140341F.P05
–7–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
FOREX CAPITAL MARKETS, LLC, On Appeal from the 429th Judicial District
Appellant Court, Collin County, Texas
Trial Court Cause No. 429-00075-2014.
No. 05-14-00341-CV V. Opinion delivered by Justice O'Neill.
Justices Lang-Miers and Brown
KELLY M. CRAWFORD, Appellee participating.
In accordance with this Court’s opinion of this date, we AFFIRM the trial court’s order
denying appellant Forex Capital Markets, LLC motion to compel arbitration.
We ORDER appellee KELLY M. CRAWFORD recover his costs of this appeal from
appellant FOREX CAPITAL MARKETS, LLC.
Judgment entered this 31st day of December, 2014.
–8–
Order entered December 31, 2014
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-14-00341-CV
IN RE FOREX CAPITAL MARKETS, LLC, Relator
V.
KELLY M. CRAWFORD, Appellee
On Appeal from the 429th Judicial District Court
Collin County, Texas
Trial Court Cause No. 429-00075-2014
ORDER
In accordance with this Court’s opinion of this date, we DENY Relator Forex Capital
Markets, LLC’s petition for writ of mandamus.
We ORDER real party in interest Kelly M. Crawford recover his costs of this proceeding
from relator Forex Capital Markets.
/Michael J. O'Neill/
MICHAEL J. O'NEILL
JUSTICE
Tab D
Case 4:13-cv-00383-RAS-DDB Document 74 Filed 01/06/14 Page 1 of 10 PageID #: 994
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
§
SECURITIES AND EXCHANGE COMMISSION, §
§
Plaintiff, §
§
v. § CIVIL ACTION NO.
§ 4:13-CV-0383
KEVIN G. WHITE, §
KGW CAPITAL MANAGEMENT, LLC, §
REVELATION FOREX FUND, L.P., and §
RFF GP, LP, §
§
Defendants, §
§
MERIDIAN PROPANE, L.P., and §
W CORPORATE REAL ESTATE, LP d/b/a §
KGW REAL ESTATE, §
§
Relief Defendants. §
------------------------------------ §
RECEIVER'S SECOND QUARTERLY STATUS REPORT
Kelly M. Crawford, as the court-appointed Receiver, submits the following second
quarterly status report pursuant to this Court's Order Appointing Receiver (the "Receivership
Order"). 1
The Receivership Order directs the Receiver to submit quarterly status reports within
thirty (30) days after the end of each calendar quarter reflecting to the best of the Receiver's
knowledge as of the period covered by the report the existence, value, and location of all
Receivership Property, and of the extent of liabilities, both those claimed to exist by others and
those the Receiver believes to be legal obligations of the Receivership Estate. More specifically,
paragraph 51 of the Receivership Order states:
1
The Receiver requests the Court to take judicial notice of the pleadings on file in this lawsuit.
1
Case 4:13-cv-00383-RAS-DDB Document 74 Filed 01/06/14 Page 2 of 10 PageID #: 995
"The Quarterly Status Report shall contain the following:
A. Summary of the operations of the Receiver;
B. The amount of cash on hand, the amount and nature of accrued administrative
expenses, and the amount of unencumbered funds in the estate;
C. A schedule of all the Receiver's receipts and disbursements (attached as Exhibit A
to the Quarterly Status Report), with one column for the quarterly period covered
and a second column for the entire duration of the receivership;
D. A descriptions of all known Receivership Property, including approximate or
actual valuations, anticipated or proposed dispositions, and reasons for retaining
assets where no disposition is intended;
E. A description of liquidated and unliquidated claims held by each Receivership
Estate, including the need for forensic and/or investigatory resources;
approximate valuations of claims; and anticipated or proposed methods of
enforcing such claims (including likelihood of success in; (i) reducing the claims
to judgment; and, (ii) collecting such judgments);
F. A list of all known creditors with their addresses and the amounts of their claims;
G. The status of Creditor Claims Proceedings, after such proceedings have been
commenced; and
H. The Receiver's recommendations for a continuation of the receivership and the
reasons for the recommendations."
2
Case 4:13-cv-00383-RAS-DDB Document 74 Filed 01/06/14 Page 3 of 10 PageID #: 996
On September 25, 2013, the Receiver filed his initial Quarterly Status Report [Docket
No. 46] based upon the period from the inception of the receivership on July 10, 2013 through
September 25, 2013. This Second Quarterly Status Report incorporates the information
contained in the initial Quarterly Status Report, and is based upon the period from September 26,
2013 through December 31, 2013.
I.
SUMMARY OF THE OPERATIONS OF THE RECEIVER AND DESCRIPTION OF
KNOWN RECEIVERSHIP PROPERTY AND CLAIMS HELD BY THE
RECEIVERSHIP ESTATE
During the period covered by this Second Quarterly Status Report, the Receiver
continued to identify assets subject to the receivership, continued to liquidate receivership assets,
investigated and developed claims held by the Receivership Estate, and settled numerous claims
for the benefit of the Receivership Estate.
On October 16, 2013, the Receiver and his counsel interviewed Defendant Kevin White
at the office of Mr. White's counsel. Mr. White cooperated in the interview and the information
Mr. White shared with the Receiver helped the Receiver identify additional assets to recover and
assisted in the investigation of claims against third parties.
A. IDENTIFICATION OF ADDITIONAL RECEIVERSHIP PROPERTY
Based on the Receiver's interview with Mr. White, the Receiver discovered that a display
booth purchased with investor funds was being stored with the manufacturer of the booth in
Carrollton, Texas. Through the forensic accounting conducted by the Receiver's accounting
firm, the Receiver traced at least $40,000 of investor funds to The Trade Group, a company in
Carrollton, Texas that manufactures display booths for promotional events. Defendant White
had a display booth custom built to promote the Revelation Forex Fund and paid The Trade
3
Case 4:13-cv-00383-RAS-DDB Document 74 Filed 01/06/14 Page 4 of 10 PageID #: 997
Group $40,000 for the booth. After the booth was used by Defendant White, it was returned to
The Trade Group for storage. The Receiver confirmed the display booth was at The Trade
Group and the Receiver negotiated the sale of the display booth to an independent third party for
$6,000. From these sales proceeds, the Receiver paid The Trade Group $1,380 for the cost of
storing the display booth for several months.
B. SETTLEMENT OF FRAUDULENT TRANSFER CLAIMS
As reported in the Receiver's initial Quarterly Status Report, the Receiver determined
that he had fraudulent conveyance claims against the family members of Defendant Kevin
White, and those persons who worked in the KGW Capital office with Defendant White. The
Receiver made demand upon them and they denied any liability to the receivership. During the
period covered by this Second Quarterly Status Report the Receiver successfully negotiated
settlements with each of the persons the Receiver alleged were recipients of fraudulent transfers,
and such settlements were approved by the Court.
With respect to the White family, the Receiver recovered from the daughter of Defendant
Kevin White approximately $7,000 from monies remaining in an account in the daughter's
name; a 2009 Chevrolet Tahoe being driven by the daughter; and a Sig Sauer hand gun given by
Defendant White to his daughter. The Receiver recovered from the son of Defendant White a
negligible sum ($13.00) remaining in a bank account in the son's name; and a shot gun given by
Defendant White to his son. A 2010 Toyota Tundra being driven by White's son had no equity
and was repossessed by the lender. The Receiver also obtained a release from Defendant
White's ex-wife of her claims against the receivership estate arising out of her divorce decree.
The Receiver also negotiated settlements with each of the persons who worked with
Defendant White in the KGW Capital Office, as follows:
4
Case 4:13-cv-00383-RAS-DDB Document 74 Filed 01/06/14 Page 5 of 10 PageID #: 998
Steve McCraw is paying $71,000 over the next several months2 ;
Cody Savage paid $42,1 00;
Christine Xu paid $1 0,000; and
Jill Waterston paid $2,500.
The settlement of these claims totaling $125,600, without the expense of protracted
litigation, will benefit the Receivership Estate and ultimately the approved claimants who are the
beneficiaries of the Receivership Estate.
C. CONTINUED LIQUIDATION OF RECEIVERSHIP ASSETS
During the period covered by this Second Quarterly Status Report, the Receiver sold the
following receivership assets:
1. Sculpture of horses for $770
2. Trade Display (as discussed above) for $6,000
3. Guns for $2,600
4. 2009 Chevrolet Tahoe for $25,000
5. Miscellaneous personal property left over from the auction and fishing lures
for $166.
The Receiver is still seeking buyers for the following receivership assets:
1. 2008 Mercedes Benz S550 for sale for $32,000
2. 2002 Rolex Yacht Master watch for sale for $6,000
3. One shotgun and one Sig Sauer handgun, which the Receiver is seeking to sell
for approximately $700.
2
To date Mr. McCraw has paid $40,000.
5
Case 4:13-cv-00383-RAS-DDB Document 74 Filed 01/06/14 Page 6 of 10 PageID #: 999
D. DEVELOPMENT OF CLAIMS HELD BY RECEIVERSHIP ESTATE
The Receiver continued investigating the role of other persons and entities, including
professionals, involved with KGW Capital, the Revelation Forex Fund, the solicitation of
investors in the fund, and/or the trading of the fund. The Receiver made demand upon Weaver
& Tidwell and the individual accountants who prepared the performance report of the account
managed by Brian Hinman that was used by Defendant White. In addition, the Receiver made
demand upon Sean Hyman whom the Receiver contends endorsed the Revelation Forex Fund for
a period of time.
In furtherance of the Receiver's investigation, on November 20, 2013 the Receiver's
counsel took the deposition of Brian Hinman, the person who traded the Revelation Forex Fund
and who was employed by FXCM. At the deposition Mr. Hinman invoked his 5th amendment
privilege in response to most of the questions. On December 30, 2013 the Receiver and his
counsel met in Chicago, Illinois with James Bibbings, a former auditor for the National Futures
Association, to determine the standards of the industry that should have been followed by FXCM
in dealing with Defendant White, KGW Capital, and the Revelation Forex Fund. The Receiver
recently made demand upon FXCM for the production of additional documents.
The Receiver also made demand upon Doug Conder (the CPA who prepared the K-1 's
issued to the investors) to pay to the receivership a sum equal to the cost to amend the tax
returns, and reissue the K -1 's
The Receiver received assignments of the claims against third parties from each of the
investors in the Revelation Forex Fund. The Receiver proposed to the Court as part of the
Receiver's liquidation plan that these claims against third parties be pursued on a reduced
contingent fee basis.
6
Case 4:13-cv-00383-RAS-DDB Document 74 Filed 01/06/14 Page 7 of 10 PageID #: 1000
II.
AMOUNT OF CASH ON HAND AND ACCRUED ADMINISTRATIVE EXPENSES
As reported in the Receiver's First Quarterly Status Report, to administer the receipt and
disposition of monies in the receivership, the Receiver opened receivership accounts at JP
Morgan Chase and at Legacy Banl(. The current balance of the Legacy Bank Account is
$28,535.91. Legacy Bank originally claimed a right of offset to these monies based upon a loan
Legacy Bank had made to a receivership entity that is in default, but Legacy Bank, despite
having actual notice of the need to file a creditor claim in the receivership, failed to file a claim
in the receivership and does not hold an approved claim in the receivership. Accordingly, the
Receiver contends such monies are available to the receivership. The current balance held in the
receivership account at Chase is $3,256,526.16. The Receiver also has $40 cash on hand
received from the sale of fishing lures that remains to be deposited into the receivership account.
The accrued and unpaid administrative expenses from the inception of the receivership
through December 25, 2013 that have not been paid are approximately as follows: $37,965 in
Receiver's fees; $65,705.50 in Receiver's attorney's fees; $10,761.43 in expenses incurred; and
$5,509.10 in Receiver's accounting fees and expenses. In addition, a check payable to Platinum
Storage in the amount of $14 7 has not yet cleared the bank. As a result, the current balance of
unencumbered funds in the receivership account at Chase is approximately $3,136,438.10 3 . A
schedule of the Receiver's receipts and disbursements since the Receiver's First Quarterly
Report is attached hereto as Exhibit A. A schedule of the Receiver's total receipts and
disbursements from the inception of the receivership through January 3, 2014 is attached hereto
as Exhibit B.
3
This balance is based upon the cash on hand as of January 3, 2014, and administrative expenses incurred as of
December 25, 2013.
7
Case 4:13-cv-00383-RAS-DDB Document 74 Filed 01/06/14 Page 8 of 10 PageID #: 1001
III.
THE STATUS OF CLAIMS PROCEEDINGS FOR INVESTORS AND CREDITORS
On October 9, 2013, the Receiver filed with the Court the Receiver's Proposed
Liquidation and Distribution Plan and established a procedure for investors and creditors to
submit claims to the Receiver; for the Receiver to make his recommendations regarding the
claims; and an opportunity for the investors and creditors to object to the Receiver's
recommendations.
On October 30, 2013, the Receiver filed his Report Regarding the Responses of Investors
and Creditors to the Receiver's Proposed Liquidation and Distribution Plan. This Report
included a list of the claims filed by the investors and creditors as well as the Receiver's
recommendations regarding the claims. As set forth in the Receiver's Report, no investors or
creditors objected to the Receiver's Proposed Liquidation Plan. One creditor, First Community
Bank, objected to the Receiver's Distribution Plan, which proposes to pay investors before
paying creditors. First Community Bank objected to the Receiver's proposal and argues that
creditors should be paid ahead of investors, or equally. No other objections were filed by any
investor or creditor.
On November 6, 2013, the Receiver filed a motion with the Court requesting a hearing on
the Receiver's Liquidation and Distribution Plan. The Court granted that motion and conducted
a hearing on December 5, 2013. To date the Court has not ruled upon the objection or the
proposed Liquidation and Distribution Plan. Once the Court issues its ruling the Receiver
intends to request the Court to authorize the Receiver to make an interim distribution to the
approved claimants.
8
Case 4:13-cv-00383-RAS-DDB Document 74 Filed 01/06/14 Page 9 of 10 PageID #: 1002
IV.
RECOMMENDATION FOR CONTINUATION OF RECEIVERSHIP
This is the second report from the Receiver and significant work remains for the Receiver
to do in this case, including selling the few remaining assets, recovering damages from third
parties as discussed herein, administering the investor and creditor claims, and making
distributions pursuant to a distribution plan to be approved by the Court. Accordingly, the
Receiver recommends the receivership continue.
Respectfully submitted January 6, 2014.
RECEIVER KELLY M. CRAWFORD
Is/ Kelly M Crawford
Kelly M. Crawford, Receiver
State Bar No. 05030700
500 North Akard Street, Suite 2700
Dallas, Texas 75201
(214) 706-4200- Telephone
(214) 706-4242- Telecopier
9
Case 4:13-cv-00383-RAS-DDB Document 74 Filed 01/06/14 Page 10 of 10 PageID #: 1003
CERTIFICATE OF SERVICE
The undersigned hereby certifies that on January 6, 2014 I electronically filed the
foregoing document with the clerk of the U.S. District Court, Eastern District of Texas, using the
electronic case filing system of the court. The electronic case filing system sent a "Notice of
Electronic Filing" to the following attorneys of record:
Janie L. Frank Meridian Propane LP
Texas Bar No. 07363050 5645 Hillsborough Drive
Securities and Exchange Commission Plano, Texas 75093
Burnett Plaza, Suite 1900 Relief Defendant
801 Cherry St., Unit #18
Fort Worth, TX 76102-6882 Edwin Tomko
frankj@sec.gov Jason Ross
Dykema Gossett, PLLC
B. David Fraser 1717 Main St., Suite 4000
Texas Bar No. 24012654 Dallas, TX 75201
Securities and Exchange Commission Counsel for Kevin G. White, J(GW Capital
Burnett Plaza, Suite 1900 Management, LLC, Revelation Forex
801 Cherry Street, Unit #18 Fund, LP, RFF GP, LP and W Corporate
Fort Worth, TX 76102-6882 Real Estate, LP d/b/a KGW Real Estate
fraserb@sec. gov
Counsel for Plaintiff
Is/ Kellv M Crawford
KELLY M. CRAWFORD
10
Tab E
Case 4:13-cv-00382-RAS-DDB Document 70 Filed 01/06/14 Page 1 of 9 PageID #: 1453
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
§
U.S. COMMODITY FUTURES TRADING §
COMMISSION, §
§
Plaintiff, § Civil Action No.
vs. § 4: 13-cv-382
§
RFF GP, LLC, KGW CAPITAL §
MANAGEMENT, LLC, and KEVIN §
G. WHITE, §
§
Defendants, §
§
REVELATION FOREX FUND, LP, §
MERIDIAN PROPANE LP, and §
W CORPORATE REAL ESTATE, LP d/b/a §
KGW REAL ESTATE §
-------------------------------- §
SECOND STATUS REPORT OF THE RECEIVER
Kelly M. Crawford, as the court-appointed Receiver, submits the following second status
report pursuant to this Court's Order Granting Plaintiff's Ex Parte Emergency Motion for a
Statutory Restraining Order, Appointment of a Temporary Receiver, Expedited Discovery, an
Order to Show Cause Regarding a Preliminary Injunction, and Other Equitable Relief (the
"Statutory Restraining Order" or "SRO"). 1
1
The Receiver requests the Court to take judicial notice of the pleadings on file in this lawsuit.
1
Case 4:13-cv-00382-RAS-DDB Document 70 Filed 01/06/14 Page 2 of 9 PageID #: 1454
The SRO directs the Receiver to submit an initial report and periodic reports thereafter to
the Court. More specifically, the SRO states:
"IT IS FURTHER ORDERED that the Temporary Receiver .... within
sixty (60) days of being appointed and periodically thereafter, as directed by the
Court, file with the Court and serve on the parties a report summarizing efforts to
marshal and collect assets, administer the receivership estate, and otherwise
perform the duties mandated by this Order."
SRO, § VI, -o E.
On September 6, 2013, the Receiver filed his Initial Status Report [Docket No. 39] based
upon the period from the inception of the receivership on July 10, 2013 through September 6,
2013. This Second Status Report incorporates the information contained in the Initial Status
Report, and is based upon information obtained through December 31, 2013.
I.
SUMMARY OF THE OPERATIONS OF THE RECEIVER AND DESCRIPTION OF
KNOWN RECEIVERSHIP PROPERTY AND CLAIMS HELD BY THE
RECEIVERSHIP ESTATE
Since the filing of his Initial Status Report, the Receiver continued to identify assets
subject to the receivership, continued to liquidate receivership assets, investigated and developed
claims held by the Receivership Estate, and settled numerous claims for the benefit of the
Receivership Estate.
On October 16, 2013, the Receiver and his counsel interviewed Defendant Kevin White
at the office of Mr. White's counsel. Mr. White cooperated in the interview and the information
Mr. White shared with the Receiver helped the Receiver identify additional assets to recover and
assisted in the investigation of claims against third parties.
2
Case 4:13-cv-00382-RAS-DDB Document 70 Filed 01/06/14 Page 3 of 9 PageID #: 1455
A. IDENTIFICATION OF ADDITIONAL RECEIVERSHIP PROPERTY
Based on the Receiver's interview with Mr. White, the Receiver discovered that a display
booth purchased with investor funds was being stored with the manufacturer of the booth in
Carrollton, Texas. Through the forensic accounting conducted by the Receiver's accounting
firm, the Receiver traced at least $40,000 of investor funds to The Trade Group, a company in
Carrollton, Texas that manufactures display booths for promotional events. Defendant White
had a display booth custom built to promote the Revelation Forex Fund and paid The Trade
Group $40,000 for the booth. After the booth was used by Defendant White, it was returned to
The Trade Group for storage. The Receiver confirmed the display booth was at The Trade
Group and the Receiver negotiated the sale of the display booth to an independent third party for
$6,000. From these sales proceeds, the Receiver paid The Trade Group $1,380 for the cost of
storing the display booth for several months.
B. SETTLEMENT OF FRAUDULENT TRANSFER CLAIMS
The Receiver determined that he had fraudulent conveyance claims against the family
members of Defendant Kevin White, and those persons who worked in the KGW Capital office
with Defendant White. The Receiver made demand upon them and they denied any liability to
the receivership. The Receiver successfully negotiated settlements with each of the persons the
Receiver alleged were recipients of fraudulent transfers, and such settlements were approved by
the Court.
With respect to the White family, the Receiver recovered from the daughter of Defendant
Kevin White approximately $7,000 from monies remaining in an account in the daughter's
name; a 2009 Chevrolet Tahoe being driven by the daughter; and a Sig Sauer hand gun given by
Defendant White to his daughter. The Receiver recovered from the son of Defendant White a
3
Case 4:13-cv-00382-RAS-DDB Document 70 Filed 01/06/14 Page 4 of 9 PageID #: 1456
negligible sum ($13.00) remaining in a bank account in the son's name; and a shot gun given by
Defendant White to his son. A 2010 Toyota Tundra being driven by White's son had no equity
and was repossessed by the lender. The Receiver also obtained a release from Defendant
White's ex-wife of her claims against the receivership estate arising out of her divorce decree.
The Receiver also negotiated settlements with each of the persons who worked with
Defendant White in the KGW Capital Office, as follows:
Steve McCraw is paying $71,000 over the next several months 2 ;
Cody Savage paid $42,100;
Christine Xu paid $1 0,000; and
Jill Waterston paid $2,500.
The settlement of these claims totaling $125,600, without the expense of protracted
litigation, will benefit the Receivership Estate and ultimately the approved claimants who are the
beneficiaries of the Receivership Estate.
C. CONTINUED LIQUIDATION OF RECEIVERSHIP ASSETS
In the months of October, November, and December, 2013, the Receiver sold the
following receivership assets:
1. Sculpture of horses for $770
2. Trade Display (as discussed above) for $6,000
3. Guns for $2,600
4. 2009 Chevrolet Tahoe for $25,000
5. Miscellaneous personal property left over from the auction and fishing lures
for $16_6. _____
6.
2
To date Mr. McCraw has paid $40,000.
4
Case 4:13-cv-00382-RAS-DDB Document 70 Filed 01/06/14 Page 5 of 9 PageID #: 1457
The Receiver is still seeking buyers for the following receivership assets:
1. 2008 Mercedes Benz S550 for sale for $32,000
2. 2002 Rolex Yacht Master watch for sale for $6,000
3. One shotgun and one Sig Sauer handgun, which the Receiver is seeking to sell
for approximately $700.
D. DEVELOPMENT OF CLAIMS HELD BY RECEIVERSHIP ESTATE
The Receiver continued investigating the role of other persons and entities, including
professionals, involved with KGW Capital, the Revelation Forex Fund, the solicitation of
investors in the fund, and/or the trading of the fund. The Receiver made demand upon Weaver
& Tidwell and the individual accountants who prepared the performance report of the account
managed by Brian Hinman that was used by Defendant White. In addition, the Receiver made
demand upon Sean Hyman whom the Receiver contends endorsed the Revelation Forex Fund for
a period of time.
In furtherance of the Receiver's investigation, on November 20, 2013 the Receiver's
counsel took the deposition of Brian Hinman, the person who traded the Revelation Forex Fund
and who was employed by FXCM. At the deposition Mr. Hinman invoked his 5th amendment
privilege in response to most of the questions. On December 30, 2013 the Receiver and his
counsel met in Chicago, Illinois with James Bibbings, a former auditor for the National Futures
Association, to determine the standards of the industry that should have been followed by FXCM
in dealing with Defendant White, KGW Capital, and the Revelation Forex Fund. The Receiver
recently made demand upon FXCM for the production of additional documents.
5
Case 4:13-cv-00382-RAS-DDB Document 70 Filed 01/06/14 Page 6 of 9 PageID #: 1458
The Receiver also made demand upon Doug Conder (the CPA who prepared the K -1 's
issued to the investors) to pay to the receivership a sum equal to the cost to amend the tax
returns, and reissue the K -1 's
The Receiver received assignments of the claims against third parties from each of the
investors in the Revelation Forex Fund. The Receiver proposed to the Court as part of the
Receiver's liquidation plan that these claims against third parties be pursued on a reduced
contingent fee basis.
II.
AMOUNT OF CASH ON HAND AND ACCRUED ADMINISTRATIVE EXPENSES
To administer the receipt and disposition of monies in the receivership, the Receiver
opened receivership accounts at JP Morgan Chase and at Legacy Banlc The current balance of
the Legacy Bank Account is $28,535.91. Legacy Bank originally claimed a right of offset to
these monies based upon a loan Legacy Bank had made to a receivership entity that is in default,
but Legacy Bank, despite having actual notice of the need to file a creditor claim in the
receivership, failed to file a claim in the receivership and does not hold an approved claim in the
receivership. Accordingly, the Receiver contends such monies are available to the receivership.
The current balance held in the receivership account at Chase is $3,256,526.16. The Receiver
also has $40 cash on hand received from the sale of fishing lures that remains to be deposited
into the receivership account.
The accrued and unpaid administrative expenses from the inception of the receivership
through December 25, 2013 that have not been paid are approximately as follows: $37,965 in
Receiver's fees; $65,705.50 in Receiver's attorney's fees; $10,761.43 in expenses incurred; and
$5,509.10 in Receiver's accounting fees and expenses. In addition, a check payable to Platinum
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Case 4:13-cv-00382-RAS-DDB Document 70 Filed 01/06/14 Page 7 of 9 PageID #: 1459
Storage in the amount of $14 7 has not yet cleared the banlc As a result, the current balance of
unencumbered funds in the receivership account at Chase is approximately $3,136,438.10 3 . A
schedule of the Receiver's receipts and disbursements from the inception of the receivership
through January 3, 2014 is attached hereto as Exhibit A.
III.
THE STATUS OF CLAIMS PROCEEDINGS FOR INVESTORS AND CREDITORS
On October 9, 2013, the Receiver filed with the Court the Receiver's Proposed
Liquidation and Distribution Plan and established a procedure for investors and creditors to
submit claims to the Receiver; for the Receiver to make his recommendations regarding the
claims; and an opportunity for the investors and creditors to object to the Receiver's
recommendations.
On October 30, 2013, the Receiver filed his Report Regarding the Responses of Investors
and Creditors to the Receiver's Proposed Liquidation and Distribution Plan. This Report
included a list of the claims filed by the investors and creditors as well as the Receiver's
recommendations regarding the claims. As set forth in the Receiver's Report, no investors or
creditors objected to the Receiver's Proposed Liquidation Plan. One creditor, First Community
Bank, objected to the Receiver's Distribution Plan, which proposes to pay investors before
paying creditors. First Community Bank objected to the Receiver's proposal and argues that
creditors should be paid ahead of investors, or equally. No other objections were filed by any
investor or creditor.
On November 6, 2013, the Receiver filed a motion with the Court requesting a hearing on
the Receiver's Liquidation and Distribution Plan. The Court granted that motion and conducted
3
This balance is based upon the cash on hand as of January 3, 2014, and administrative expenses incurred as of
December 25,2013.
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a hearing on December 5, 2013. To date the Court has not ruled upon the objection or the
proposed Liquidation and Distribution Plan. Once the Court issues its ruling the Receiver
intends to request the Court to authorize the Receiver to make an interim distribution to the
approved claimants.
IV.
RECOMMENDATION FOR CONTINUATION OF RECEIVERSHIP
This is the second report from the Receiver and significant work remains for the Receiver
to do in this case, including selling the few remaining assets, recovering damages from third
parties as discussed herein, administering the investor and creditor claims, and making
distributions pursuant to a distribution plan to be approved by the Court. Accordingly, the
Receiver recommends the receivership continue.
Respectfully submitted January 6, 2014.
RECEIVER KELLY M. CRAWFORD
Is/ Kelly M Crawford
Kelly M. Crawford, Receiver
State Bar No. 05030700
500 North Akard Street, Suite 2700
Dallas, Texas 75201
(214) 706-4200- Telephone
(214) 706-4242- Telecopier
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CERTIFICATE OF SERVICE
The undersigned hereby certifies that on January 6, 2014 I electronically filed the
foregoing document with the clerk of the U.S. District Court, Eastern District of Texas, using the
electronic case filing system of the court. The electronic case filing system sent a "Notice of
Electronic Filing" to the following attorneys of record:
Harry E. W edewer Meridian Propane LP
John Einstman 5645 Hillsborough Drive
U.S. Commodity Futures Trading Commission Plano, Texas 75093
Three Lafayette Centre Relief Defendant
1155 21st Street, N.W.
Washington, D.C. 20581
Counsel for Plaintiff
Edwin Tomko
Jason Ross
Dykema Gossett, PLLC
1717 Main St., Suite 4000
Dallas, TX 75201
Counsel for RFF GP, LLC, KGW Capital
Management, J(evin G. White, Revelation
Forex Fund, LP, and W Corporate Real
Estate, LP d/b/a KGW Real Estate
Is/ Kelly M Crawford
KELLY M. CRAWFORD
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