Home Forex Exclusive: ThinkMarkets hit with $4.28M court order to return client funds

Exclusive: ThinkMarkets hit with $4.28M court order to return client funds

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FNG Exclusive… FNG has learned that London/Australia based Retail FX and CFDs broker ThinkMarkets has been issued a court order by the Business and Property Courts of England and Wales – London Circuit Commercial Court, in the amount of USD $4.28 million.

The court order, issued against both of ThinkMarkets’ UK and Australia operating entities – TF Global Markets (UK) Ltd and TF Global Markets (Aust) Pty Ltd – is an interim mandatory injunction that requires ThinkMarkets to transfer $4,280,818.88 into its client money segregated account in the UK by 4:30pm on Monday, January 15.

The court order follows a legal dispute that ThinkMarkets is having with a (now former) client from Turkey, Abdurrahman Suzgun. ThinkMarkets had apparently informed Mr. Suzgun in late 2021 that USD $4.28 million was to be debited (i.e. removed) from his account, leading to the legal action he took against the broker.

The order, issued by His Honour Judge Richard Pearce, states that if ThinkMarkets disobeys the order, the company (or any director or officer) may be held to be in contempt of court and may be imprisoned, fined, or have its assets seized.

ThinkMarkets Dispute Background

Abdurrahman Suzgun runs a trading firm in Turkey that specializes in forex and precious metals. In 2019 he opened an account with ThinkMarkets UK, ostensibly to hedge his own positions in his physical precious metals business.

ThinkMarkets opened two accounts for Mr. Suzgun – a “regular” trading account and a Swap-Free Account. Swap-Free Accounts are fairly common among FX/CFD brokers for clients who trade according to Islamic law, which does not permit charging of interest.

In mid 2021 ThinkMarkets said that Mr. Suzgun had breached the terms of his agreement with the broker, claiming that Mr. Suzgun engaged in “swap abuse”. ThinkMarkets claimed that the Swap-Free Account was supposed to be used by Mr. Suzgun only in exceptional circumstances, and in respect of positions that were to be carried for a short period of time, i.e. less than one day.

According to ThinkMarkets, Mr. Suzgun executed more than 90% of his trades through the Swap-Free Account, and that a substantial number of the positions were carried for longer than one day. ThinkMarkets claimed that it would have earned more than USD $1.6 million in Swap Charges on these trades if they had been executed in the “regular” account as opposed to the Swap-Free Account, instead of losses which it incurred on the trades. That led ThinkMarkets to debit $4.28 million of what it termed “disputed funds” (plus another $370K of “undisputed funds”) from Mr. Suzgun’s account, transferring the money out of the country to ThinkMarkets Australia (which acts as the liquidity provider to ThinkMarkets UK), while it looked to negotiate a settlement with Mr. Suzgun on the matter.

Mr. Suzgun has refuted ThinkMarkets’ claims that he breached the agreement, stating that all his trades were made within the wording of his agreement with ThinkMarkets. He also contends that, after the dispute, ThinkMarkets novated his accounts to its Bermudan entity to move out of the FCA jurisdiction, despite Mr. Suzgun’s objections.

While the matter is scheduled to be heard in the UK courts beginning in February – i.e. the UK courts have not yet finalized their ruling on the claims and counterclaims made by each of ThinkMarkets and Mr. Suzgun – as noted above the court has indeed now ordered ThinkMarkets to return all of the “disputed funds” to its client money segregated account in the UK.

ThinkMarkets has been in the news lately mainly around its attempt to go public via a merger with Toronto Stock Exchange listed special purpose acquisition company FG Acquisition Corp. After announcing a deal last May that would see ThinkMarkets “IPO” at a valuation of about USD $160 million by merging with FG, the transaction was eventually cancelled in December after virtually all of FG’s public shareholders decided to get their money back from FG instead of going ahead with the deal. The followed reports (initiating here at FNG) that ThinkMarkets had incurred tens of millions of dollars in losses in 2021-2022 and had built up debt, leading ThinkMarkets’ auditors to issue a “going concern” warning for the company.

A copy of the court order to ThinkMarkets can be seen here (pdf).

We will continue to follow this story as it develops.

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